Detailed Answer
Answer (A) is correct. The learning curve reflects the increased rate at which people perform tasks as they gain experience. The time required to perform a given task becomes progressively shorter. Ordinarily, the curve is expressed in a percentage of reduced time to complete a task for each doubling of cumulative production. One common assumption in a learning curve model is that the cumulative average time (and labor cost) per unit is reduced by a certain percentage each time production doubles. Thus, an 80% learning curve indicates that a doubling of production will reduce the cumulative average unit completion time by 20%. For example, if the first unit required 50 hours to complete, the average completion time after two units will be 40 hours (50 hours × 80%). If total production time is 80 hours (2 × 40 cumulative average time), and the first unit required 50 hours, the time to produce the second unit must be 30 hours.