The usage of computers on a large scale facilitated widespread changes in organizations in the twentieth century.Given this, which of the following statements will be true?
A)The LRAC of a firm operating with the old organizational structure is likely to be lower than the firms with the new structure.
B)After adopting a new organizational structure that can effectively manage large-scale operations, a firm is likely to have lower LRAC whose minimum is at a higher output.
C)The LRAC of a firm with a new organizational structure will be higher and to the right of a firm operating with the old organizational structure.
D)After adopting a new organizational structure that can effectively manage large-scale operations, a firm's LRAC is likely to shift downward to the left.

Question

Quizplus · Accepted Answer

The adoption of a new organizational structure that can effectively manage large-scale operations will lead to a reduction in LRAC. This is because the firm will be able to achieve economies of scale by producing more output with the same level of inputs. This will lead to a lower LRAC whose minimum is at a higher output level.  Option A is incorrect because the adoption of a new structure is likely to lead to a lower LRAC. Option C is incorrect because the LRAC of a firm with a new organizational structure is likely to be lower and to the left of a firm with an old organizational structure. Option D is incorrect because LRAC is likely to shift downwards and not to the left.

The Usage of Computers on a Large Scale Facilitated Widespread