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In Canada, if a firm lays off workers during a recession, how will the firm's marginal product of labor changes? This reduces output level and
In Canada, if a firm lays off workers during a recession, how will the firm's marginal product of labor changes? This reduces output level and keep prices high. Interestingly, in Japan, during recessions, firms are more likely to keep their workers, and sell products at a lower price. Assuming that the production function remains unchanged over a period that is long enough to include many recession and expansions, would you expect the average product of labor to be higher in Japan or in Canada? Why?
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