In what way do competitive markets have a natural remedy for discriminatory hiring practices
A)Government naturally steps in 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)Workers who receive a wage less than their marginal product will leave the firm.

Question

Quizplus · Accepted Answer

In competitive markets, firms that discriminate will face higher costs and lose out to firms that do not discriminate. This is because discrimination creates inefficiencies in the labor market and reduces profits for the discriminating firm. As a result, profit-maximizing firms are incentivized to hire based on merit rather than discriminatory factors, providing a natural remedy for discriminatory hiring practices. While government intervention may also be necessary to combat discrimination in some cases, the competitive market mechanism is a powerful tool for promoting equal employment opportunities. Options A, C, and D are incorrect because they either do not relate to competitive markets or do not provide a natural remedy for discriminatory hiring practices.

In What Way Do Competitive Markets Have a Natural Remedy