This question is in the context of the Becker model. Suppose Firm A and Firm B sell their output in the same output market, purchase inputs in the same input markets and use the same production technology. Suppose the owners of Firm A and Firm B hire only women, with the following inequality true:WF(1 + dA) < WMandWF(1 + dB) < WM.If the discrimination coefficient is higher for Firm A than Firm B (dA > dB), then which of the following statements is true? ●Firm B will earn higher profits ●Both firms will earn the same profits ●Firm A will earn higher profits ●Both firms will earn less profit than they would if they had d=0
This question is in the context of the Becker model. Suppose Firm A and Firm B sell their output in the same output market, purchase inputs in the same input markets and use the same production technology. Suppose the owners of Firm A and Firm B hire only women, with the following inequality true:WF(1 + dA) < WMandWF(1 + dB) < WM.If the discrimination coefficient is higher for Firm A than Firm B (dA > dB), then which of the following statements is true? ●Firm B will earn higher profits ●Both firms will earn the same profits ●Firm A will earn higher profits ●Both firms will earn less profit than they would if they had d=0
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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This question is in the context of the Becker model. Suppose Firm A and Firm B sell their output in the same output market, purchase inputs in the same input markets and use the same production technology. Suppose the owners of Firm A and Firm B hire only women, with the following inequality true:WF(1 + dA) < WMandWF(1 + dB) < WM.If the discrimination coefficient is higher for Firm A than Firm B (dA > dB), then which of the following statements is true?
●Firm B will earn higher profits
●Both firms will earn the same profits
●Firm A will earn higher profits
●Both firms will earn less profit than they would if they had d=0
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