Underlying Assumptions: Men and women are equally productive. Men’s wages are higher than women’s wages for...

Underlying Assumptions:

Men and women are equally productive.
Men’s wages are higher than women’s wages for the same work.
Profit maximization.

	men	women
output per hour	20 units	20 units
wage per hour	$20	$18

Given these three assumptions, why would a business ever hire a man? One our assumptions must be wrong! Which combination of workers would maximize profits?

Expert Solution

Business hire men not because they are prejudiced against women but because they feel that men perform better at certain task than women . The discrimination however does not appear to be gender specific.Business has certain beliefs about men versus women,and what they can do, and given those beliefs,they choose the person they feel is the best person to hire to maximize their profit.Again businesses make taste based discrimination and do not hire a person even though they know that the person will be more productive.So discrimination is not based on prejudice against women. Employees draw information about average performance of women and do not like to hire members from lower performing group.Employers have preconceived ideas about ability of men and women and act accordingly.Thus taste based discrimination is bad because employer is prejudiced against women. But statistical discrimination where employers feel that there is difference in ability is worse and difficult to eradicate.

Given the assumptions ,hiring more men will reduce profit because cost of hiring is more .Hiring more women will reduce cost and maximize profit.So more women should be hired to men,

Rahul Sunny answered 2 years ago

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