Changes in labor supply can place limits on the strategies available to firms.

Question

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If the labor supply decreases, firms may face difficulties in finding qualified workers, which can limit their ability to expand or pursue certain strategies. On the other hand, if the labor supply increases, firms may have more options for hiring and can potentially pursue more ambitious strategies, but may also face downward pressure on wages and higher competition for workers.

Changes in Labor Supply Can Place Limits on the Strategies