Production Adjustment Lags in Capital-Intensive Industries

Steps:

• Identify businesses by production flexibility: services adjust via labor, manufacturing via shifts, extractives via infrastructure.
• Assess short-run output response: quick for labor-intensive, slower for capital-heavy.
• Recognize oil sector's unique barriers: exploration requires years for drilling and permits.
• Compare lags: D has longest delay versus others' weeks-to-months adjustments.

Why D is correct:

• Oil exploration follows economic law of supply inelasticity in extractive industries, where fixed capital and regulatory hurdles create multi-year lags to ramp up output.

Why the others are wrong:

• A: Fast-food restaurants scale quickly by hiring staff and extending hours, with low capital barriers.
• B: Housecleaning services expand output almost immediately by adding flexible workers.
• C: Newspaper printing adjusts in days via extra press runs or overtime shifts.

Final answer: D