Learning by doing, which leads to lower costs in the long run, is often Question 37 options: A) increased when new machinery is brought into the production process. B) a function of cumulative output, that is producing more of the good or service. C) improved through better use of computers in the production process. D) not very important to most firms.

Six years ago, an 80-kw diesel electric set cost $160,000. the cost index for this class of equipment six years ago was 187 and is now 194. the cost-capacity factor is 0.6. the plant engineering staff is considering a 120-kw unit of the same general design to power a small isolated plant. assume we want to add a precompressor, which (when isolated and estimated separately) currently costs $13291. determine the total cost of the 120-kw unit. (hint: skip $ and comma symbols)