Wage Discrimination

Question 1

Def

Answer 1

Paying different workers different wages to do the same job

Question 2

Condition

Answer 2

There must be more than one group of workers who are willing to work for different wages. Firm must be able to differentiate between the groups and keep them separate

Question 3

Employer who discriminate mispercieve the

Answer 3

True value of groups of potential employees and believe that their MRP is less than it is

Question 4

As firm will demand workers whose MRP

Answer 4

Is less than the cost of hiring them their demand should be lower at D2 then it should be at D1

Question 5

As a result of this discrimination

Answer 5

Fewer workers are hired (Q2>Q1) and at a lower wage rate (WR2>WR1).

Question 6

The contraction of supply on the diagram on the left

Answer 6

Discriminated against workers need to move into other markets to fibd work shifting the supply curve for labour to thr right from s1 to s2 thus depressing wages in this labour market from WR1 to WR2