Principles of Economics- Mankiw (5th) 417

Principles of Economics- Mankiw (5th) 417 - CHAPTER 19 E A...

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CHAPTER 19 EARNINGS AND DISCRIMINATION 429 costly. . . . Officials of the company may or may not have disliked blacks, but they were not willing to forgo the profits necessary to indulge such prejudice. The story of southern streetcars illustrates a general lesson: Business owners are usually more interested in making profit than in discriminating against a par- ticular group. When firms engage in discriminatory practices, the ultimate source of the discrimination often lies not with the firms themselves but else- where. In this particular case, the streetcar companies segregated whites and blacks because discriminatory laws, which the companies opposed, required them to do so. DISCRIMINATION BY CUSTOMERS AND GOVERNMENTS Although the profit motive is a strong force acting to eliminate discriminatory wage differentials, there are limits to its corrective abilities. Here we consider two of the most important limits: customer preferences and government policies. To see how customer preferences for discrimination can affect wages, consider
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