Suppose the discrimination coefficient increases as the firm employs more black workers. In particular, suppose the discrimination coefficient is d = 0.01EB where EB is the number of blacks hired by the firm so that each employer facing competitive wages of wW for whites and wB for blacks acts as if she faces competitive wages of wW for whites and wB(1+d) for blacks. As usual, assume the labor market is competitive so that the firm faces wages of wB and wW. Lastly, assume that the firm must employ 200 workers. Define the wage ratio to be wW / wB and do the following:
(a) Solve for the number of blacks hired as a function of the wage ratio. Graph the number of blacks hired against the wage ratio.
(b) Solve for the number of whites hired as a function of the wage ratio. Graph the number of whites hired (x-axis) against the wage ratio (y-axis).