Microeconomics 20th Edition by McConnell, Sean Flynn, Stanley Brue

Exercise 12

The labor demand and supply data in the following table relate to a single occupation. Use them to answer the questions that follow. Base your answers on the tastefordiscrimination model.

a. Plot the labor demand and supply curves for Hispanic workers in this occupation.
b. What are the equilibrium Hispanic wage rate and quantity of Hispanic employment
c. Suppose the white wage rate in this occupation is $16. What is the Hispanicto-white wage ratio
d. Suppose a particular employer has a discrimination coefficient d of $5 per hour. Will that employer hire Hispanic or white workers at the Hispanicwhite wage ratio indicated in part c Explain.
e. Suppose employers as a group become less prejudiced against Hispanics and demand 14 more units of Hispanic labor at each Hispanic wage rate in the table. What are the new equilibrium Hispanic wage rate and level of Hispanic employment Does the Hispanicwhite wage ratio rise or fall Explain.
f. Suppose Hispanics as a group increase their labor services in that occupation, collectively offering 14 more units of labor at each Hispanic wage rate. Disregarding the changes indicated in part e , what are the new equilibrium Hispanic wage rate and level of Hispanic employment Does the Hispanicwhite wage ratio rise, or does it fall