The market power effect of an international joint venture can lead to welfare losses for the domestic economy unless offset by cost reductions.Which type of cost reduction would NOT lead to offsetting welfare gains for the overall economy?

Question

Quizplus · Accepted Answer

Lower wages extracted from workers may lead to cost reductions for the joint venture, but it is not a sustainable or desirable way to generate long-term welfare gains for the overall economy. It can lead to lower consumer purchasing power and lower standards of living for workers, resulting in overall welfare losses. The other options (research and development generating improved technology, development of more productive machinery, and new work rules promoting worker efficiency) can lead to sustainable cost reductions and long-term welfare gains for the overall economy.

The Market Power Effect of an International Joint Venture Can