Which of the following are short-run adjustments, and which are long-run adjustments?
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Which of the following are short-run adjustments, and which are long-run adjustments? LO9.1 a. Wendy’s builds a new restaurant. b. Harley-Davidson Corporation hires 200 more production workers. c. A farmer increases the amount of fertilizer used on his corn crop. d. An Alcoa aluminum plant adds a third shift of workers. |
Here is the full solution including the answer and explanation.
All the answer options have been used.
Short run
b
c
d
Long run
a
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Explanation
Short run
b
c
d
The short-run adjustment refers to how prices can move fast to restore market equilibrium.
The hiring activity of new employees by corporation HD will increase the production when the employees start working.
The increment in the fertilizer used for the crop will lead to a change in the growth pattern of the crops immediately so it can be considered as a short-run adjustment.
Adding the new workers in plant A would lead to rise in production so it can be considered as a short-run adjustment..
Long run
a
The long-run is defined as the sufficient time in which a firm can adjust the production of the services and goods according to the forecasted need. The change in the capital investment is subject to the long run because it has no immediate effect on production.
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