Production of the DeLorean car, made famous in the film Back to the Future, never got above 25,000 units during its lifetime. Automobile industry analysts estimate that production of this car needed to reach around 300,000 units to achieve the ________, which refers to a decrease in unit cost as product volume increases.
A)slotting allowance benefit
B)price fixing return
C)improvement value effect
D)experience curve effect
E)cumulative bundling benefit

Question

Quizplus · Accepted Answer

The experience curve effect refers to the decrease in unit cost as product volume increases due to increased efficiency in the production process and economies of scale. The estimated production numbers needed for this effect to take place for the DeLorean car was around 300,000 units, which was never reached. Choice A (slotting allowance benefit) and Choice E (cumulative bundling benefit) are not relevant to this situation. Choice B (price fixing return) is not a commonly used term in the automobile industry, and Choice C (improvement value effect) does not accurately describe the concept of decreasing unit costs through increased production volume.

Production of the DeLorean Car, Made Famous in the Film