If firms are competitive, then labor-market discrimination
A)cannot exist in either the short run or the long run.
B)will be more of a problem than if the market were monopolistic or imperfectly competitive.
C)likely will not be a long-run problem unless customers exhibit discriminatory preferences or government maintains discriminatory policies.
D)likely will be more of a problem in the long run than in the short run due to the zero-profit condition that characterizes long-run equilibrium for competitive firms.

Question

Quizplus · Accepted Answer

Labor-market discrimination may not exist in the long run if firms are competitive, unless there are discriminatory preferences among customers or if the government maintains discriminatory policies. In a perfectly competitive market, firms cannot afford to discriminate against workers based on irrelevant characteristics because competitors will hire those workers and gain a cost advantage, resulting in a competitive disadvantage for the discriminating firms. Therefore, discrimination is unlikely to persist in the long run in a competitive labor market. However, discrimination may still occur in the short run temporarily until market forces eliminate it.

If Firms Are Competitive, Then Labor-Market Discrimination