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A firm might cut its labour force dramatically which could reduce immediate expenses and increase profits in the short term. Over the long term, however,

A firm might cut its labour force dramatically which could reduce immediate expenses and increase profits in the short term. Over the long term, however, the firm might not be able to serve its customers properly or it might alienate its remaining workers; if so, future profits will decrease, and the stock price will decrease in anticipation of these problems

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