Question

The _____ theory states that when many items are produced repetitively, the unit cost of those items decreases in a regular pattern as more units are produced.

A) Learning Curve
B) Experience Curve
C) Incremental Cost
D) Marginal Cost

Answer 1

The correct answer is B) Experience Curve

Explanation:.

The Experience Curve theory states that when many items are produced repetitively, the unit cost of those items decreases in a regular pattern as more units are produced. This is due to the accumulation of experience and learning gained over time, leading to increased efficiency and lower costs.

For example, let's consider a manufacturing company that produces smartphones. At the beginning, the company may face challenges and inefficiencies in the production process, resulting in higher costs per unit. However, as the company produces more and gains experience, it becomes more efficient and can optimize its production processes, leading to lower costs per unit.