Meadows Mowers Initially Spent Nine Man-Hours to Assemble a Lawnmower

question 54

Multiple Choice

Meadows Mowers initially spent nine man-hours to assemble a lawnmower. But as the production doubled, the number of hours spent on assembling a mower reduced by 20 percent. This increase in productivity reduced the company's cost per unit. What is this phenomenon referred to as?

• A) learning-curve effect
• B) network effect
• C) black-swan event
• D) time compression diseconomies

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Definitions:

Long Run

A period during which all factors of production and costs are variable, and firms can enter or exit the industry.

Total Revenue

The gross revenue from selling products or services before deducting any costs.

Fixed Cost

Expenditures that do not change with the level of production or sales, such as rent, salaries, and insurance.

Total Cost

the complete cost of production including both fixed and variable costs.