Answered: Assume that the labour market for…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.8P

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Assume that the labour market for mechanics is competitive and that it is differentiated into two groups: male and female. Assume that the mechanics in this market have vehicle repair ability regardless of whether they are male or female. Currently, the equilibrium wage in the female market is lower than in the male market. Further assume that the market for vehicle repair is competitive.

If some consumers in the market for vehicle repair have a strong preference for having their vehicle repaired by a male mechanic, what will result?

Question 34 options:

	The difference in wages will eventually disappear since vehicle repair is a homogeneous good.
	Mechanic shops that hire male mechanics will be able to charge a higher price for vehicle repair.
	Mechanic shops that hire female mechanics will be much more profitable.
	Mechanic shops that hire male mechanics will be much more profitable.

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