Refer to Figure 8.5.Suppose the firm increases output from 20 to 30 units.In the short run:
A) the firm will employ the same amounts of labor and capital as it would in the long run.
B) the firm will employ 5 more workers and 2 less units of capital than it would in the long run.
C) the firm will employ 5 fewer workers and 2 more units of capital than it would in the long run.
D) the firm will produce the output at a lower cost than it can in the long run.

Question

Refer to Figure 8.5.Suppose the firm increases output from 20 to 30 units.In the short run: 
A) the firm will employ the same amounts of labor and capital as it would in the long run. 
B) the firm will employ 5 more workers and 2 less units of capital than it would in the long run. 
C) the firm will employ 5 fewer workers and 2 more units of capital than it would in the long run. 
D) the firm will produce the output at a lower cost than it can in the long run.

Quizplus · Accepted Answer

Moving from 20 to 30 units of output in the short run means the firm can increase the variable factor of production, which is labor, but cannot adjust the fixed factors of production, which is capital. Therefore, it will employ 5 more workers but will use 2 less units of capital than it would in the long run.