Question

value 6.66 points Conceptual Question 6-7 Consider two processes,... Consider two processes, A and B, with an initial cost of c(1)-20. Process A has a leaning rate of LR-0.95 and process B has a learning rate of LR-0.8. After 20 units Process A is cheaper Process B is cheaper The two processes will have the same cost Cannot be determined from the given information

Answer 1

Answer: Process B is cheaper

Explanation:

Process A

Learning rate = b = 95%			0.95
K = Cost to produce the first unit=			20
And n = ln(b)/ln(2).			-0.07

Unit no. X	Cost= K*(X^n)
1	20.00
2	19.00
3	18.44
4	18.05
5	17.75
Total	$93.24

Procass B

Learning rate = b = 80%			0.8
K = Cost to produce the first unit=			20
And n = ln(b)/ln(2).			-0.32

Unit no. X	Cost= K*(X^n)
1	20.00
2	16.00
3	14.04
4	12.80
5	11.91
Total	$74.75

As we can see that in Process A cost to produce first 5 units is more than cost to produce first 5 units in process B. Hence, we can say that Process B is cheaper