Which of the following statements best defines the law of experience?
A)Costs per unit decrease with increases in cumulative volume of production.
B)The average total cost of production decreases as a result of increasing the number of different goods produced.
C)Cost per unit decreases with increase in the years of experience of employees.
D)Marginal cost increases when output is increased.

Question

Quizplus · Accepted Answer

The law of experience, also known as the learning curve, states that costs per unit decrease with increases in cumulative volume of production due to the increased experience of workers and the refinement of production methods. So, option A best defines the law of experience. Option B suggests economies of scope, not experience. Option C is not related to the law of experience. Option D describes the law of diminishing returns, not the law of experience.

Which of the Following Statements Best Defines the Law of Experience