Say that Japanese firms commit to avoid laying off their employees when demand for their products is low,but American firms often lay off workers when demand is low.As a result,ceteris paribus,we would expect Japanese firms to:

Question

Quizplus · Accepted Answer

Japanese firms committing to not laying off employees during low demand implies that they have a long-term perspective and prioritize maintaining their workforce. This could lead them to continue producing at prices that American firms would deem unprofitable and shut down operations. This indicates that Japanese firms may have lower fixed costs and higher economies of scale, allowing them to sustain their operations even during periods of low demand. Therefore, we would expect Japanese firms to continue producing at some prices at which American firms would shut down.

Say That Japanese Firms Commit to Avoid Laying Off Their