Question: Suppose the firm's production function is given by where Ew and Eb are the number of whites and blacks employed by the firm respectively. It

Suppose the firm's production function is given by

where Ew and Eb are the number of whites and blacks employed by the firm respectively. It can be shown that the marginal product of labor is then

Suppose the market wage for black workers is $10, the market wage for whites is $20, and the price of each unit of output is $100.
(a) How many workers would a firm hire if it does not discriminate? How much profit does this non-discriminatory firm earn if there are no other costs?
(b) Consider a firm that discriminates against blacks with a discrimination coefficient of .25. How many workers does this firm hire? How much profit does it earn?
(c) Finally, consider a firm that has a discrimination coefficient equal to 1.25. How many workers does this firm hire? How much profit does it earn?

q-10,E, E,

Step by Step Solution

★★★★★

3.38 Rating (170 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a There are no complementarities between the types of labor as the quantity of labor enters the prod... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

869-B-E-D-S (3196).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

Suppose that a firms production function is given by the following relationship: Where Q = output L = labor input K = capital input a. Determine the percentage increase in output if labor input is...

A Single Buyer in the Labor Market: The text treated extensively the case where market power is concentrated on the supply side but it could equally well be concentrated on the demand side. When a...

Suppose that a firm's production function is given by Q = K0.33L0.67, where MPK = 0.33 K- 0.67L0.67 and MPL = 0.67K0.33L- 0.33. a. As L increases, what happens to the marginal product of labor? b. As...

9-4. A firm's production function is given by Q = 40 In(Ew + EB + 1) where Ew and EB are the number of white workers and Black workers employed by the firm, respec- tively. From this it can be shown...

Problem Set #2 - Clearly provide (typed or handwritten) your response to each question. This assignment is worth 10 points, graded on both completion and accuracy, and to be turned in at the start of...

4. Suppose that a firm's production function is given by: 9 = 8 nw + no where nw represents the number of white workers and no the number of black workers at the firm (so black and white workers are...

D Scenario 1 A firm's production function is given by Q = 40 In(Ew + Eg + 1) where Ew and Es are the number of whites and blacks employed by the firm respectively. From this it can be shown that the...

A firm's production function is given by Q=40ln(EW+EB+1) where EW and EB are the number of whites and blacks employed by the firm respectively. From this it can be shown that the marginal product of...

5. Suppose the firm's production function is given by q=10, E, +E where Ew and Ey are the number of whites and blacks employed by the firm respectively. Suppose the market wage for black workers is...

Suppose that $1 billion of pass-throughs is used to create a CMO structure with a PAC bond with a par value of $700 million and a support bond with a par value of $300 million. Answer the question...

In doing a five-year analysis of future dividends, the Dawson Corporation is considering the following two plans. The values represent dividends per share. a. How much in total dividends per share...

Interest rates on 4-year Treasury securities are currently 5.3%, while 6-year Treasury securities yield 7.75%. If the pure expectations theory is correct, what does the market believe that 2-year...

Consider a bivariate data set and imagine that the data are projected onto the x-axis and then checks for outliers are made using the MADmedian rule. The same is done when projecting the data onto...

If an income maintenance program entails a $3,000 basic benefit and a benefit reduction rate of .30, what will be the size of the subsidy received by a family that earns $2,000 per year? What will be...

One way of aiding low-income families is to increase the minimum wage. An alternative is to provide a direct grant of nonlabor income. Compare the impact of these two options on work incentives.

Having determined the subnets allocated from the major network, how many IP addresses, in total, have been allocated from the major network? How many IP addresses remain unallocated in the major...

All Financial Planning Problems are available in MyFinanceLab at www.myfinancelab.com. 1. Go to finance.yahoo.com to review analysts stock recommendations. a. Enter the stock symbol NOK, for Nokia...

Families First is a managed care plan that has been asked to submit a premium bid to ABC Company, a large manufacturer in its service area. The premium bid includes the primary care for all of the...