Political Economy of Racism-page6

Political Economy of Racism-page6 - -Monopolists set...

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- The lower cost firms could sell their products and services at a lower price than the discriminatory firms who would... - Lose market share, assuming consumers would rationally choose the lower cost “identical” products of the non-discriminatory firms. Discussion Questions for Next Time: 1. Explain why discrimination cannot persist under competition, according to Friendman. 2. What evidence do liberals (&Whitehead) offer to refute this theory? 3. Why do conservatives think government intervention would be/has been harmful, rather than helpful in reducing inequality? 4. What conceptual problem does Whitehead have with the conservatives argument that people of color’s own choices are at fault? 5. What is Whitehead’s main criticism of liberals. Thursday September 22, 2011 Quiz on Tuesday - Conrad 1-6 - Chapters 9, 14, 19. - Lecture Materials 9/6-9/22 - Multiple Choice, explanation optional, short answer/essay/true false (explain!) Review Product Markets - Firms calculate profit maximizing quantity of product.
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Unformatted text preview: -Monopolists set prices. -Competitive firms take prices (determined by D=S in the market) Labor Markets -Workers supply labor (preferences opportunity cost of time relative to the wage offer). -Employers demand labor (at a quantity that maximizes profit depends on wage, technology, and other input prices, etc.) -Assume labor markets competitive: D=S yields an equilibrium wage, employers are wage “Takers.” Look into Becker, Economics of Discrimination and Friendman, Capitalism and Freedom. Markets and Discrimination -A monopolist with a taste for discrimination can maintain a segregated workforce by virtue of price setting power and monopoly profits. -Such discrimination would not persist under competition, because a new entrant could hire qualified workers at a lower wage, pass on savings as lower prices and steal market share from the discriminatory employer. Rationality of Statistical Discrimination...
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