It Has Been Suggested That Learning Effects Are Important Only

question 85

Multiple Choice

It has been suggested that learning effects are important only during the start-up period of a new process and that they cease after two or three years. Any decline in the experience curve after such a point is due to

• A) reduction in fixed costs.
• B) higher depreciation costs.
• C) economies of scale.
• D) obsolescence.

---

Definitions:

Source of Cash Flow

Source of Cash Flow refers to the origins of the money coming into a business, indicating how the company is earning its income.

Net Operating Loss

A financial situation where a company's allowable tax deductions are greater than its taxable income, leading to a negative taxable income.

Carryback

Carryback involves applying tax deductions or credits to a prior tax year, resulting in a tax refund or reduced tax liability.

Carry Forward

A provision that allows individuals or businesses to apply current year losses, credits, or deductions to future tax years, to reduce taxable income.