Experience Curve
Concept that costs decrease as volume increases (learning effect).
Formula
Unit Cost ↓ as Cumulative Output ↑
Real World
Tesla reduced the cost of its Model 3 battery pack from around $190/kWh at launch to under $100/kWh within a few years, largely driven by the experience curve effect as Gigafactory output scaled.
Exam Focus
Distinguish the experience curve from economies of scale — experience curve is cumulative output over time, not just batch size.
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