Suppose that an employer hires workers with brown hair and workers with blond hair.Each type of worker has the same productivity.Which of the following is correct if the employer discriminates by offering blonde workers lower wages than brunette workers?

Question

Quizplus · Accepted Answer

Discrimination in wages leads to inefficient allocation of resources as the employer is not choosing the most productive worker for the job. This results in higher costs for the employer as they may be paying more for less productive workers. Firms that solely focus on maximizing profits by hiring the best worker for the job, regardless of their hair color, will have lower costs and will be more efficient. Discrimination is illegal, but this does not necessarily mean that the employer will go out of business or face union strikes.

Suppose That an Employer Hires Workers with Brown Hair and Workers