Define discrimination. Why does discrimination occur, and what evidence exists that it does occur?
What will be an ideal response?
Economic discrimination occurs when equivalent factors of production receive different payments for equal contributions to output. This is hard to apply in practice because it is not always possible to tell when two factors of production are “equivalent.” A difference in income between two factors is generally not sufficient evidence to conclude that discrimination occurs.Discrimination may occur because of prejudice. This may be on the part of an employer or on the part of fellow workers. There may also be statistical discrimination. Statistical discrimination is said to occur when the productivity of a particular worker is estimated to be low just because that worker belongs to a particular group. It is not necessarily caused by prejudice, but it can still be a source of inefficiency. Convincing evidence of discrimination is often difficult to obtain, and court cases that allege discrimination are difficult to resolve.
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If the income elasticity of demand for a Snickers bar is 0.59, then we know that within the relevant price range for Snickers bars, it is
a. price elastic b. price inelastic c. income inelastic d. income elastic e. according to the economist's definition of inferior, an inferior good
Suppose a bank in Germany borrows $2 million U.S at an interest rate of 5%. The bank then converts the amount into euros, the local currency, at a rate of 2 euros per dollar. It lends the €4 million at an interest rate of 15% to other firms. After one year, the loan is repaid with interest, and the bank receives €4.6 million. The bank now wants to pay back the debt. If the current exchange
rate is 3 euros per dollar, the bank will: a. face a loss of $570,000 approximately. b. face a loss of $470,000 approximately. c. make a profit of $500,000 approximately. d. make a profit of $320,000 approximately.
If price rises, what happens to the quantity demanded for a product?
a. It does not change. b. It decreases. c. Uncertain--economic theory has no answer to this question. d. It increases.
The following figure shows the production-possibility curves of Canada (AB) and the rest of the world (CD). I1 and I2 are community indifference curves for Canada and the rest of the world. Before Canada entered into trade with the rest of the world, the total amount of cotton produced in the world was ________ bales and the total amount of wheat produced in the world was ________ bushels.
A. twenty-four; sixteen B. twenty-four; nineteen C. eighteen; twenty-four D. nineteen; twenty-four