Average cost tends to increase with accumulated production experience.

Question

Quizplus · Accepted Answer

The statement is not completely accurate. While it is true that costs may initially decrease with accumulated production experience, they may eventually reach a minimum and then start to increase due to factors such as diminishing returns, wear and tear on equipment, and the need for more specialized labor. This is known as the experience curve effect. Therefore, the average cost does not always increase with accumulated production experience.

Average Cost Tends to Increase with Accumulated Production Experience