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    Question

    The reduction in cost due to increase in efficiency is

    referred as_____.
    A Income effect Correct Answer Incorrect Answer
    B Price effect Correct Answer Incorrect Answer
    C Learning curve effect Correct Answer Incorrect Answer
    D Substitution effect Correct Answer Incorrect Answer

    Solution

    Models of the learning or experience curve effect express the relationship between experience producing a good and the efficiency of that production, specifically, efficiency gains that follow investment in the effort. The effect has large implications for costs and market share, which can increase competitive advantage over time.

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