Question

Suppose a change in health care laws increases the cost of hiring an employee. We can expect output in the short run to __________ and output in the long run to __________.

Answer 1

Answer: decrease, be unaffected.

Step-by-step explanation:

We should note that the output in the short run can be expected to reduce in the short run. This is due to the increase in the cost of employing an employee as there's at least a fixed input in the short run.

Subsequently, since the output is variable in the long run and not fixed like that of the short run, the output won't be unaffected in the long run.