Explain how labor resistance and political and legislative influences

Explain how labor resistance and political and legislative influences reduce the ability of firms to minimize their costs of production. What do the two have in common in this regard?

What will be an ideal response?

ANSWER

Both labor resistance and political and legislative influences constrain the set of choices firm managers have when it comes to the production process. Labor resistance is often focused on protecting existing jobs. Thus, it becomes more difficult for the manager to substitute capital for labor or combine two or more tasks in an effort to reduce production costs. Legislative influences often come in the form of mandated combinations of capital and labor or restrictions on the minimum number of workers that can be assigned to a particular task. Once again, this has the effect of limiting the manager’s choices and may preclude certain input combinations that would result in reduced production costs.