Profit-maximizing firms should:
A)only improve workplace safety if the marginal cost of doing so is zero.
B)improve workplace safety if the marginal cost of improved safety is less than the value workers place on improved safety.
C)only improve workplace safety if they are ordered to do so by a regulatory agency.
D)only improve workplace safety if the labor market is perfectly competitive.

Question

Quizplus · Accepted Answer

Profit-maximizing firms should consider the marginal cost of any action they take. In the case of workplace safety, they should only invest in improving safety if the marginal cost is less than the value workers place on improved safety. This means that they should invest in improving safety up to the point where the next unit of investment costs more than it benefits the workers. Choosing answer A, C, or D would not be effective in maximizing profits.

Profit-Maximizing Firms Should