Explanation Option (a) Competitive markets are a remedy for employer discrimination because the entry of firms that care only about profit tends to eliminate discriminatory wage differentials. This is possible if non-discriminatory firms that focus on profit hire the set of workers who are discriminated against by others at low wages for profit maximization. Soon this strategy would be followed by other employers, and this continues until wage differentials disappear. Thus, option ‘a’ is correct...

Elimination of differential wages in competitive market.

Principles of Economics (MindTap Course List)

8th Edition

ISBN: 9781305585126

Author: N. Gregory Mankiw

Publisher: Cengage Learning

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Question

Chapter 19, Problem 6CQQ

To determine

Elimination of differential wages in competitive market.

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Similar questions

Does the earnings gap between the average wages of females and the average wages of males prove labor market discrimination? Why or why not?
Will a free market tend to encourage or discourage discrimination? Explain briefly.

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