10 Assume that we are analyzing employer-based discrimination and that there are two groups of workers, group A and group B. These workers are perfect substitutes. The firm's production function is given by q = 20√√EA + EB. This production function implies that the marginal product of labor equals MP = The wage for group B workers is $20, the wage for group A workers is $25, and the price of output equals $100. a. If this firm were non-discriminatory, then how many workers would the firm hire and what would profits equal? √EA+EB b. If the employer discriminated against workers from group B and had a discrimination coefficient equal to 0.85, then how many workers would the firm hire and what would profits equal? c. Given the discrimination coefficient in part (b), what do you expect to happen to this firm in the long-run and why?

10 Assume that we are analyzing employer-based discrimination and that there are two groups of workers, group A and group B. These workers are perfect substitutes. The firm's production function is given by q = 20√√EA + EB. This production function implies that the marginal product of labor equals MP = The wage for group B workers is $20, the wage for group A workers is $25, and the price of output equals $100. a. If this firm were non-discriminatory, then how many workers would the firm hire and what would profits equal? √EA+EB b. If the employer discriminated against workers from group B and had a discrimination coefficient equal to 0.85, then how many workers would the firm hire and what would profits equal? c. Given the discrimination coefficient in part (b), what do you expect to happen to this firm in the long-run and why?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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