Suppose that all employers in a perfectly competitive industry do not have a preference for discriminating against African Americans but that all the employees at one firm do. Describe what will happen to the profit- maximizing output level of this firm in the long run if the employees’ racial preferences influence the firm’s hiring decisions.
Answer to relevant QuestionsExplain why it is more difficult to organize and maintain an input buyers’ cartel than an output sellers’ cartel. What does the contract curve in an Edgeworth production box signify? Why do competitive markets generate equilibriums that lie on the contract curve?What two characteristics define a public good? Which of the following are public goods: parks, police services, welfare payments to the poor, production of energy, space exploration? “External costs are bad, and government intervention to reduce them is justified. External benefits, however, are good, and there is no reason for government intervention in this case.” Evaluate these statements.Because the federal government covered the lion’s share of the costs, Los Angeles built the 17.4-mile-long Red Line subway system in the 1990s, at a cost of $ 4.7 billion ($ 270 million per mile). The fully allocated costs ...
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