Question

. What are the short- and long-run e§ects on the amount of labor a Örm hires if there is a permanent decrease in its output price? Explain each step in your analysis. (You do not need to provide analysis using isoquants, just use what we did in class to think about the long-run impact of the change.)

Answer 1

IN Short run impact will not be that higher,but in long run firms changes its production output, in long run firm is always associated withvaverage  cost .And would try to minimise its average cost per unit.in long run cost is very much determined whether the firm will exist in the competition or it may exit.