Suppose the market wage rate for whites is $18 an hour and the monetary value a prejudiced employer attaches to the disutility of hiring African Americans is $3. This employer will be indifferent between hiring African Americans and whites only when the African-American wage rate is

Question

Quizplus · Accepted Answer

The employer values the disutility of hiring African Americans at $3. Therefore, to be indifferent between hiring an African American and a white employee, the wage rate for African Americans must be $3 less than the wage rate for whites, which is $18. Thus, $18 - $3 = $15.

Suppose the Market Wage Rate for Whites Is $18 an Hour