Question

How does learning by doing affect average total costs? Short-run average total costs will rise because employees will continually fail, causing training costs (variable costs) to increase for the firm. Short-run average total costs will rise because firms will hire employees that have failed in previous jobs, causing decreased productivity Short-run average total costs will fall because employees learn which production processes work and become more productive given the available inputs. Short-run average total costs will remain unchanged because any gain in employee productivity will be exactly canceled out by increased fixed costs.

Answer 1

short run average total cost will fall due to learning by doing because employees learn which production processes work and become more productive given the available inputs.

Answer: Option (C).