In the short run, firms increase output by
In the short run, firms increase output by
- A) increasing the amount of labour used
- B) decreasing the size of their plant
- C) increasing the size of their plant
- D) decreasing the amount of labour used
Correct Answer: A) increasing the amount of labour used
Explanation
This question is asking how firms can increase their output in the short run. The answer is found among the options provided. The correct option is Option A: increasing the amount of labour used.
In economics, the short run refers to a period of time when some factors of production, such as capital, cannot be changed. In this case, the size of the plant cannot be changed in the short run. Therefore, the only variable factor of production that can be increased to increase output is labour.
By increasing the amount of labour used, firms can produce more output without changing the size of their plant. However, it's important to note that there are limits to how much output can be increased in the short run by increasing labour. This is because there may be diminishing returns to labour, meaning that as more labour is added, the marginal product of labour may eventually decrease.
To learn more about this topic, please read the relevant sections of the recommended textbooks.