Chapter 73, Problem 1CYU

a)

To determine

Whether it is true, false, or ambiguous if the marginal productivity theory of income distribution is inconsistent with the presence of income disparities associated with gender, race, or ethnicity.

Explanation of Solution

It is false because differences in marginal productivity are correlated with gender, race, or ethnicity among people or workers as income disparities are associated with them. The major source for this correlation can be past discrimination because it affects the marginal productivity of individuals such as restricting the workers to acquire human capital that can easily support them to increase their productivity. Moreover, this correlation can be incurred with the differences in work experience related to gender, race, or ethnicity such as women earning lower wages as compared to men with the assumption that women take more leaves from work for childcare. Therefore, this is false.

Economics Concept Introduction

Introduction: According to the marginal productivity theory of income distribution, every individual will receive wage or income according to the total contribution or output that they produce.

b)

To determine

Whether it is true, false, or ambiguous if companies engage in workplace discrimination but these companies’ competitors do not are likely to have lower profits as a result of their actions.

Explanation of Solution

This is true because when competitors of companies do not are likely to hire less able workers then companies discriminate against more able workers who can be considered the wrong gender, race, or ethnicity. Moreover, companies may earn fewer profits as compared to their competitors who are not involved in discrimination.

Economics Concept Introduction

Introduction: According to the marginal productivity theory of income distribution, every individual will receive wage or income according to the total contribution or output that they produce.

Discrimination is an unjust treatment based on different categories such as age, sex, religion, etc.

c)

To determine

Whether it is true, false, or ambiguous if workers who are paid less because they have less experience are not the victims of discrimination.

Explanation of Solution

This is ambiguous because if workers are paid less due to their less experience, then they may or may not be the victims of discrimination as it depends on the reason for their lack of experience. For example, if workers are young or they are involved in any other businesses before applying for the job, then they may have less experience and they would not be the victims of discrimination if they are paid less as this was their decision to choose another business rather than gaining experience in a particular field. But if workers have less experience due to their previous job discrimination, then they are the victims of discrimination if they are paid less in their current job.

Economics Concept Introduction

Introduction: According to the marginal productivity theory of income distribution, every individual will receive wage or income according to the total contribution or output that they produce.

Discrimination is an unjust treatment based on different categories such as age, sex, religion, etc.