In contrast to American firms,Japanese firms frequently make lifetime employment commitments to their workers and agree not to lay them off when product demand is weak.Other things being equal,we would expect Japanese firms to:

A) face more elastic product demand curves than American firms.
B) have relatively greater variable costs than American firms.
C) discontinue production at higher product prices than would American firms.
D) continue to produce in the short run at lower prices than would American firms.

Question

Dr-Nickole Davison · Accepted Answer

Final Answer : D, Explanation :  Japanese firms are committed to their employees and do not lay them off during periods of weak product demand. As a result, Japanese firms are more likely to continue producing in the short run at lower prices than American firms. This is because Japanese firms can afford to produce at lower prices without worrying about incurring the costs of laying off employees. As a result, they are likely to be more competitive in the short run compared to American firms.

Definitions

Learning Objectives

Learning Objectives

Related questions