The Experience Curve Is the Rate of Decrease in Per

question 34

True/False

The experience curve is the rate of decrease in per unit costs for each doubling of production volume.The BCG has found this rate to be between 30 percent and 60 percent.

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Definitions:

Added Profit

The additional profit generated from an activity or investment beyond the usual or expected return.

Expected-Rate-of-Return-Curve

A graphical representation that shows the relationship between the expected return on investment and the level of investment risk.

Law of Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain at a constant.

Retained Earnings

Profits that a company keeps after dividends are paid, often used for reinvestment, paying off debt, or building reserves.