As a firm builds its accumulated production volume over time, unit costs fall. Price then comes into the picture because aggressive pricing, along with aggressive advertising and promotion, can build accumulated sales volume rapidly. This pricing approach is known as __________ pricing.

Question

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This pricing approach is known as experience curve pricing, which is based on the concept that unit costs decline as accumulated production volume increases, allowing firms to reduce prices over time to stimulate demand and build sales volume.

As a Firm Builds Its Accumulated Production Volume Over Time