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?
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter11: Labor Markets
Section: Chapter Questions
Problem 2SQP
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Question
![10
4. 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
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?
B
√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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa4b12638-00e0-4370-b121-29a69644ae87%2F4c9030a4-970e-4fe9-90c4-1e8577101e19%2F96rkbob_processed.png&w=3840&q=75)
Transcribed Image Text:10
4. 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
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?
B
√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?
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