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This question was created from Homework 10 .pdf https://www.coursehero.com/file/25264574/Homework-10-pdf/

2. (Continued From In-Class Assignment) Consider a firm that hires both white and black
equation
workers. Each group of workers has an identical marginal product curve given by the
MP = 25 - 0.51.
Suppose that the going real wage rate for each group of workers is 15.
What is the optimal level of employment for each group of workers? How much
profit (surplus) does the employment of the black workers add to the firm?
b. Now suppose that the employer develops a prejudice against the black workers.
This prejudice causes the employer to subjectively devalue the productivity of
black workers. The result is that at any given level of employment, the employer
will act as if the marginal product of black workers is 5 units less than it really is.
Assuming the going wage rate for each group remains the same, what is the
optimal level of employment for each group of workers? How much profit does
the employment of black workers add to the firm now?
Illustrate a and b on a graph.
d. How low would the wage of black workers have to fall to keep the employment
of black workers the same as it was originally? How much profit does the
employment of black workers add to the firm now?
e. Given the new wage of black workers, what employment level would a non-
prejudiced employer set? How much profit would this employment of black

a. L = 20 black and 20 white. b.L = 10 black workers. L = 20 white... View the full answer

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