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The absence of discrimination-equilibrium wage
Course:- Business Economics
Reference No.:- EM131090348




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Kyle and Jeremiah own firms that produce winter mittens. Suppose the firm’s production function is given by Q =10 or L is the number of workers hired by the firm. It can be shown that the marginal product of labor is then MPL = Assume that in the absence of discrimination, the equilibrium wage is $10 per hour. The price of each unit of output is $20. Profits are equal to: Π = PQ – WL There are two groups of workers, short and tall people, and these groups are equally productive. Kyle’s firm discriminates against short people by a factor of $10.




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