Refer to the information provided.If some consumers in the market for a haircut have a strong preference for having their hair cut by a barber that is not going bald, then:
A)a competitive market equilibrium is not consistent with the wage difference between bald and non-bald barbers
B)the difference in wages will eventually disappear, since a haircut is a homogeneous good
C)barbershops that hire barbers with hair will always be much more profitable
D)barbershops that hire barbers with hair will be able to charge a higher price for a haircut to those consumers that have a strong preference for non-bald barbers

Question

Quizplus · Accepted Answer

Consumers who have a strong preference for non-bald barbers will be willing to pay a higher price for their service, and therefore, barbershops that hire non-bald barbers will be able to charge a higher price to these consumers. This price difference may lead to a wage difference between bald and non-bald barbers, but it will depend on the market demand for non-bald barbers and the supply of such barbers. Eventually, if the demand for non-bald barbers decreases, the wage difference may also disappear. However, in the short run, barbershops that hire non-bald barbers may be more profitable due to the ability to charge a higher price for their service.

Refer to the Information Provided