Question:

Prejudice and Labor Market Question/Microeconomics (Check Work)?

by Guest61612  |  earlier

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A prejudiced firm incorrectly analyzes its hiring decision problem. The following diagram shows the true MRP of female attorneys and the true labor supply of female attorneys. Adjust one or both of these curves to show why the perceptions of prejudiced law firms reduce the wages of female attorneys.

Graph (that I need to toggle with - I can either increase/decrease True LS or True MRP or both): http://i36.tinypic.com/2jd4z82.jpg

^^main question...what would really happen here? I think True MRP will decrease and True LS will remain. but i really need your thoughts to confirm this!

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  1. Looks like current demand for attorneys should be just higher than true on, so it should be one more demand curve which is created by outward shift of existing one - since expected MRP were higher than real MRP and demand for labor is derived from MRP.

    So "True" is true one and should not be changed, there supposed to be another "Expected" thus overvalued demand from right side of "True" demand.

    I don't think that supply curve is somehow affected in this case.

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