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 __________, 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 term used to describe the decrease in unit cost as product volume increases is the experience curve effect. Production of the DeLorean never reached the level needed to achieve this effect, which is estimated to be around 300,000 units. Therefore, the best choice is D, the experience curve effect. The other options are not relevant to this situation.

Production of the DeLorean Car, Made Famous in the Film