Which of the following is perceived from an experience curve?
A) Prices increase as total production volume is doubled.
B) Labor time does not impact an organization's overall costs.
C) Valued-added costs increase each time cumulative volume doubles.
D) Performing a task more often reduces the costs of doing it.

Question

Quizplus · Accepted Answer

The experience curve theory suggests that performing a task more often will reduce its costs. As cumulative production volume doubles, the cost per unit will decrease by a certain percentage, which is referred to as the learning rate. Therefore, option D is the correct answer. Option A is incorrect because the experience curve does not necessarily indicate that prices will increase as production volume doubles. Option B is incorrect since labor time is a significant factor that impacts an organization's overall costs. Option C is incorrect because the experience curve predicts that as volume doubles, the value-added cost per unit will decrease instead of increase.

Which of the Following Is Perceived from an Experience Curve