Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
In the short-run, demand is more elastic compared to the long-run.
B
In the long-run, firms adjust their production capacity, affecting labor demand.
C
Short-run demand for labor is independent of product demand.
D
Long-run demand for labor is solely based on seasonal factors.
Understanding the Answer
Let's break down why this is correct
Answer
Derived demand for labor means that the need for workers is based on the demand for the goods and services they produce. In the short run, businesses might need to hire more workers quickly to meet sudden increases in demand for their products, but they can only adjust the number of workers they have without changing their overall production capacity. For example, if a bakery suddenly gets more customers, it might hire extra bakers temporarily to keep up with orders. In the long run, businesses can change their production processes, invest in new technology, or build larger facilities, which means they can hire more or fewer workers based on more stable and predictable demand trends. Therefore, while short-run demand for labor can be more reactive and immediate, long-run demand is more strategic and planned.
Detailed Explanation
In the long-run, companies can change how much they produce. Other options are incorrect because Some might think that short-run demand is more flexible; This option suggests that short-run demand for workers doesn't depend on how much people want to buy.
Key Concepts
Short-run vs. long-run labor demand
Topic
Derived Demand for Labor
Difficulty
easy level question
Cognitive Level
understand
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