Scenario 19-6
The after-school tutoring industry is competitive, and so is the labor market for after-school tutors. Suppose male and female tutors have equal experience and skill. Currently, some tutoring centers are biased and will only hire male tutors, whereas unbiased tutoring centers desire to hire the cheapest tutors and do not care about their genders. As a result, the equilibrium wage for male tutors is higher than that of female tutors.
-Refer to Scenario 19-6. If some families strongly prefer their children to be tutored by male tutors, then
A)the difference in male and female tutor wages will eventually disappear.
B)biased tutoring centers can charge more for tutoring to offset the higher cost of hiring only male tutors.
C)all unbiased tutoring centers will go out of business in the long run.
D)all biased tutoring centers will make a profit in the short run, but will go out of business in the long run.

Question

Quizplus · Accepted Answer

Given the preference of some families for male tutors, biased tutoring centers can capitalize on this demand by charging more for their services, which helps them offset the higher wages they pay to male tutors. This scenario does not necessarily lead to the disappearance of wage differences, the failure of all unbiased tutoring centers, or the eventual closure of all biased tutoring centers.

Scenario 19-6 the After-School Tutoring Industry Is Competitive, and So Is the Is