Question from Past Microeconomics Qualifying ExamEdit
Spring 2000- Section I, Question one, George Mason University
True, False, Uncertain. Determine whether or not each of the following statements are true or false. Explain your reasoning briefly in a paragraph or two. (The explanation is often more important than the answer given). Include a carefully labeled diagram or game matrix if it helps to clarify your answer.
Other things being equal, there will be less discrimination choosing workers on the basis of race and sex in hiring a general manager versus a janitor.
True, This is a consequence of the first law of demand (that is, the lower the price of a commodity, the more of it that will be demanded). Discrimination can be thought of as a good in this case. Since a general manager can have a significant impact on the profitability of a firm, not choosing a qualified individual because of race of sex can potentially have a significant effect on a firm and therefore cost a great deal. However the janitor will not have nearly as large an influence on a firm’s profitability, and hence discrimination in this case costs a lot less than compared to discriminating against a manager.
Alternate answer: True. Prejudice is a way of economizing on information. In the case of a manager, with more at stake it will reward a greater investment in individual-specific information to learn about his skill set.
WEW-050 part 3