Question

Which of the following statements is not correct?

a. Male workers with good looks tend to earn more than male workers with average looks

b. If discriminating wage differentials persist in competitive markets, it is primarily because employers chose to discriminate even in spite of customer preferences.

c. A higher level of human capital raises a worker’s wages.

d. In competitive markets, workers are paid a wage equal to the value of their marginal product.

Answer 1

Discriminating wage differentials in a competitive market can only be persisted if consumers support such discrimination.

Employers are not in position to persist with wage discrimination in a competitive market if consumers do not support such discrimination. This is because consumers will avoid such discriminating employer thereby making the business unviable and driving such discriminating employer out of market.

So,

If discriminating wage differentials persist in competitive markets, it is primarily because employers chose to discriminate even in spite of customer preferences.

Hence, the correct answer is the option (b).