Production of the De Lorean 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 a car needs 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 experience curve effect, also known as the learning curve effect, refers to the decrease in the unit cost of production as the product volume increases. It is believed that a production volume of around 300,000 units is needed to achieve this effect. Therefore, option D is the correct answer. Option A (slotting allowance benefit) and option E (cumulative bundling benefit) are not related to production volume and option B (price fixing return) and option C (improvement value effect) do not accurately describe the phenomenon.

Production of the De Lorean Car,made Famous in the Film,"Back