Suppose the supply of both Hispanic and white pitchers (of equal quality) were highly elastic (but...

Suppose the supply of both Hispanic and white pitchers (of equal quality) were highly elastic (but not perfectly elastic). Using supply and demand graphs show the number of each player type hired by an owner with a taste for discrimination against Hispanics on one showing a non-discriminating owner

Solutions

Expert Solution

The first diagram represents the market for white pitchers. Supply of white pitchers (S_w) is highly elastic. Demand for white pitchers (Demand_w) is done by both discriminating and non-discriminating owners. The equilibrium is at P¹ and total demand for white pitchers is Q*.

The second diagram represents the market for Hispanics. Supply of Hispanics is similar to that of white pitchers assuming both demand the same wages in the market because of same quality. Here we have 2 demand curves. One of discrimination owners as Demand_D who are not willing to buy Hispanic pitchers at any price. The second demand curve is of non-discriminating owners who are willing to buy Hispanic at any price in the market given the demand curve (Demand_N). The equilibrium here will be where the supply of Hispanic intersects the demand by non-discriminating owners (Q_H)

Thus,

Wages paid to white pitchers = P¹

Wages paid to Hispanic = P²

Demand for Hispanic = Q_H (only by non-discriminating owners)

Demand for white pitchers = Q* – Q_H (which is demanded by both discriminating and non-discriminating owners)

Rahul Sunny answered 1 year ago

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