A firm uses labor and capital in its production process,and it faces competitive markets for its inputs and output.The firm's long-run labor demand curve
A) intersects with the short-run labor demand curve in several points.
B) is exactly identical to its short-run labor demand curve.
C) is steeper than its short-run labor demand curve.
D) is flatter than its short-run labor demand curve.

Question

Quizplus · Accepted Answer

In the long run, firms have more flexibility to adjust their capital usage which affects their demand for labor. As a result, the long-run labor demand curve tends to be flatter than the short-run labor demand curve, which is more responsive to changes in input prices. Therefore, the correct choice is D.

A Firm Uses Labor and Capital in Its Production Process,and