Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 7 - Businesses and the Costs of Production - Questions - Page 160: 3b

Answer

Harley Davidson employing 200 more employees would register as a short-run adjustment

Work Step by Step

Since Harley Davidson is a large company that employs many employees across many franchises, 200 employees would not register as a huge increase in cost relative to their production costs and total fixed and variable cost. Also, the hiring of employees would register as variable cost as it can be changed in the short run, assuming that the contracts of these employees are not excessively long or have clauses allowing early termination. Thus, hiring of 200 employees would be a short run adjustment, and is considered a short run reversible financial decision.
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