Firms under-invest in safety because
A) firms are not concerned with safety.
B) firms do not want their plants to be safe.
C) firms are risk averse.
D) firms do not enjoy all of the benefits from investments in safety.

Question

Quizplus · Accepted Answer

Firms may under-invest in safety because they do not enjoy all of the benefits from investing in safety, such as lower healthcare costs, reduced absenteeism, and higher employee morale. Additionally, firms may weigh the cost of investing in safety against the likelihood and severity of potential accidents, and if they deem the risk to be low, they may under-invest in safety. Thus, firms are not necessarily opposed to safety, but may be constrained by cost-benefit considerations.

Firms Under-Invest in Safety Because