Managers should not become complacent about efficiency-based cost advantages because:
A) both learning effects and economics of scale go on forever.
B) the experience curve will bottom out at some point.
C) cost advantages gained from experience effects are not affected by the development of new technologies.
D) unit costs keep reducing as output increases.
E) the experience curve steadily rises after a certain threshold is reached, indicating an increase in unit costs.

Question

Quizplus · Accepted Answer

The experience curve will eventually bottom out, meaning that the cost reductions from learning effects and economies of scale will reach a limit. Beyond this point, additional experience or scale does not significantly reduce costs further.

Managers Should Not Become Complacent About Efficiency-Based Cost Advantages Because