The Presence of a Learning Curve May Induce a Decision

question 137

Multiple Choice

The presence of a learning curve may induce a decision maker in a startup firm to choose:

• A) low levels of output to exploit economies of scale.
• B) high levels of output to exploit economies of scale.
• C) low levels of output to shift the average cost curve down over time.
• D) high levels of output to shift the average cost curve down over time.
• E) to produce more than one output.

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Definitions:

Gross Profit

The financial gain obtained after subtracting the cost of goods sold from the total revenue.

Net Profit

The amount of money remaining after all operating expenses, interest, taxes, and dividends have been deducted from total revenue.

Zone Price

The price based on geographic location or zone of customers.

Shipping Point

A location from which goods are dispatched or shipped to the buyer, often used to determine shipping costs and responsibility for the goods during transit.