In what way do competitive markets have a "natural remedy" for discriminatory hiring practices?
A)Governments regulate to resolve problems of discrimination.
B)Profit-maximizing firms that do not discriminate tend to replace firms that discriminate.
C)Wages paid to groups that are victimized by discrimination are eventually bid up to above-equilibrium levels.
D)Discrimination is usually the outcome of rational decision-making processes, and competitive markets produce rational outcomes.

Question

Quizplus · Accepted Answer

In competitive markets, profit-maximizing firms have an incentive to hire the most qualified workers, regardless of their race or gender. Discriminatory firms, on the other hand, may miss out on talented workers and fail to compete effectively. Over time, non-discriminatory firms tend to replace discriminatory firms, leading to a reduction in discriminatory hiring practices. Therefore, competitive markets have a "natural remedy" for discriminatory hiring practices.

In What Way Do Competitive Markets Have a "Natural Remedy