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

sorry D) is not none of the above it is Fixed income structure

Answer 1

Ans. B) Long-run cost structure

Short run cost structure involves changes in the variable components only whereas long run cost structure involves cahnges in fixed cost components as well. As the decision of upgradation of automated loan underwriting software and outsourcing of customer calling center to mid-west involves changes in the fixed cost components , so these are good examples of Long-run cost structure. Moreover, it takes long period of time to tak such decisions, so it is long run cost structure.