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Sir in a when A and C products can be outsourced , why demand for labour will be reduced when spare capacity will be used up?
When the company produce more B and D products due to spare capacity, it will require more labour so demand for labour should be increased not decreased.As the answer says in aboutnthe 3rd paragraph:
“If products A and C are subcontracted, the company would then have spare capacity. There is no evidence from the scenario that there is any demand for further production for B and D. ….”
Sir I understand that the company will have spare capacity when A and C are subcontracted. I’m just asking what will happen to the demand when A and C products are outsourced?
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