Costs of value added decline approximately 20 to 30 percent in real terms each time accumulated experience is doubled.
The above relationship plotted on ratio paper (i.e., logarithmic coordinates) appears as follows:
If the growth rate is constant, then annual physical volume grows at the same rate as total experience. The approximate ratios are shown below.
Such cost declines are after removing inflation. They continue indefinitely as long as the growth rate continues.
If the growth stops, costs continue to decline, but the rate of decline is cut in half each time the accumulated experience doubles.
Such cost declines do not occur automatically. They require management. In particular, added investment is required in an amount commensurate with the marginal cost of capital.