Economists argue competitive markets provide a "natural remedy" to discriminatory wage practices. Which of the following is widely recognized as a potential limit to the effectiveness of that natural remedy?
A)Some workers are members in unions.
B)Some firms pay efficiency wages; others do not.
C)Some customers are discriminatory in their buying habits.
D)Some employees have accumulated more human capital than other employees.

Question

Quizplus · Accepted Answer

Even if employers do not discriminate in their hiring or wage practices, discriminatory buying habits of some customers can limit the effectiveness of competitive markets as a natural remedy to discriminatory wage practices. This is because firms may feel pressure to discriminate in hiring or wage practices to cater to discriminatory customer preferences, affecting the wages of some workers.

Economists Argue Competitive Markets Provide a "Natural Remedy" to Discriminatory