Final answer:
True, a firm's operating leverage will change if it alters the mix of fixed capital and variable labor, as this affects the proportion of fixed costs in its cost structure and thus impacts its ability to efficiently produce output.
Step-by-step explanation:
True, operating leverage will change when a firm alters the mix of fixed capital resources and variable labor that it uses. Operating leverage refers to the extent to which a company uses fixed costs in its cost structure. A high degree of operating leverage shows that a company has a larger proportion of fixed costs relative to variable costs.
For example, with more capital, a firm can hire additional workers up to a point before diminishing productivity occurs, as illustrated by the Marginal Product of Labor chart. In the short run, fixed capital can limit productivity gains from additional labor. But in the long run, where all factors are variable, the firm can adjust its capital and labor to find the most efficient production level.
For instance, if a secretarial firm initially equipped with one typist and one PC receives a large rush order, it can't double productivity in the short term due to the single PC. However, in the long run, the firm can invest in more PCs and adjust its labor accordingly to efficiently meet increased demand. By doing so, the firm changes its capital structure, which affects its operating leverage.