A labor market is divided into two segments.All workers have the same qualifications and find jobs in either segment equally attractive.Initially,both segments are in competitive equilibrium.Then the development of worker prejudice that reduces the hiring of minorities in one segment can lead to a

Question

Quizplus · Accepted Answer

When worker prejudice reduces the hiring of minorities in one segment, the labor supply in that segment decreases while the labor supply in the other segment increases because the discriminatory behavior creates a surplus of available labor in the discriminated-against segment. As a result, there will be an increase in the wage rate in the nondiscriminating sector, which makes it even more attractive for workers. This can lead to a permanent increase in the labor supply in the nondiscriminating sector, as companies in that segment are likely to increase production to take advantage of the additional labor supply. Therefore, choice B is the best answer.

A Labor Market Is Divided into Two Segments