Question

Gen-Supply reminds employees that its ï¬agship product used to cost the company $154 tomanufacture when the company launched ten years ago. Now, the same product costs just $58 to manufacture. This demonstrates the effects of_________.A) a global web.B) dispersion linkage.C) economies of scale.D) the experience curve.E) the eï¬ciency frontier.

Answer 1

The experience curve

Step-by-step explanation:

Experience curve is an expression of an inverse relationship between the total value added cost of a product and the experience built in manufacturing it over the years .

This explains that the experience built in manufacturing a product over the years will impact the efficiency of the production processes and consequently a lower cost. The value added cost reduces with a certain percentage as volume of production increases.

Answer 2

C

Explanation:

Note that, the economies of scale principle simply implies noteworthy changes in cost of production of a company due to improved efficiency.

In the case of Gen-Supply it may have been due to increased production capacity- which reduces variable cost of the product.

So over the period of ten years, Gen-Supply experienced positive growth in production efficiency, leading to lower cost of production and operations.