Which of the following business activities has the most long-term impact on production?

• A. Hiring temporary workers
• B. Reducing inventory levels
• C. Increasing advertising expenditure
• D. Investing in new machinery and technology

Answer: (D)

Verified step by step guidance

1. Understand the concept of long-term impact on production: Long-term impact refers to changes that affect the productive capacity of a business over an extended period, rather than just immediate or short-term effects.
2. Analyze each option in terms of its effect on production capacity: Hiring temporary workers and reducing inventory levels typically influence short-term operations and flexibility but do not change the fundamental ability to produce more goods or services.
3. Consider increasing advertising expenditure: While advertising can increase demand, it does not directly increase the production capacity or efficiency of the business in the long run.
4. Focus on investing in new machinery and technology: This activity directly enhances the production capacity by improving efficiency, increasing output, or enabling new products, which has a lasting effect on the business's ability to produce.
5. Conclude that among the options, investing in new machinery and technology has the most significant long-term impact on production because it changes the productive resources and capabilities of the firm.