Question

Chase Bank recently spent millions of dollars from 2016 to 2017 to upgrade its automated loan underwriting software to lower loan processing costs and they outsorced their customer calling center to the mid west to escape the high-tax, high-regulation, and anti-business attitude they faced in California. these are all good examples of adjusting what type of cost structure?

A) Short run Cost structure

B) Long-run cost structure

C) Marginal Utility cost structure

D) None of the above

Answer 1

These are all good example of Long-run cost structure

A long run cost structure is a time period during which a manufacturer or producer is flexible in its production decisions. Businesses can either expand or reduce production capacity or enter or exit an industry based on expected profits. Firms examining a long run understand that they cannot alter levels of production in order to reach an equilibrium between supply and demand.

In macroeconomics, the long run is the period when the general price level, contractual wage rates, and expectations adjust fully to the state of the economy, in contrast to the short run, when these variables may not fully adjust.

In response to expected economic profits, firms can change production levels. For example, a firm may implement change by increasing (or decreasing) the scale of production in response to profits (or losses), which may entail building a new plant or adding a production line.

The short-run, on the other hand, is the time horizon over which factors of production are fixed, except for labor, which remains variable.