Suppose a firm uses two factors of production: males and females. The two factors of production always have different MPs and assume that W_m < W_f and that the firm can hire as many females and males at their wage rates. Also, assume that males and females are not perfect substitutes for each other in production:

a. Show on a diagram optimal amount of female and male labor firm would like to employ to minimize costs given q₀ (put female labor on horizontal axis and males on vertical axis)

b. Draw a diagram with a potential mix of two inputs given same q₀ when firm has strong preference for male employees. What wil happen to this firm in the long run? Why?

c. What are potential benefits and costs of affirmative action in this case?

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a Optimal amount of female and male labor In this scenario where males and females are not perfect substitutes and have different marginal products MP... View the full answer