Wage Discrimination

• why are NHS consultants and cleaners paid different wages?

  This difference in salary is due to a number of economic factors, including elasticity of labour supply and marginal revenue product of labour.
• When there is a difference in economic factors such as elasticity of labour supply and marginal revenue product of labour?

  wage differentials which cause a difference in wage rates
• does wage discrimination occur because of non economic or economic factors?

  non economic factors such as race, gender, age and disability
• what is an example of legal wage discrimination?

  national minimum wage
• how does the national minimum wage prevent wage discrimination?

  since companies are likely to choose older workers as they have more experience and are likely to generate more MRP, younger workers won't get chosen. The minimum wage allows young workers to gain experience and earn higher incomes in the future.
• If firms do wage discrimination what happens?

  they can lower their costs and increase their supernormal profits.
• If a firm is caught in wage discrimination, why is it bad?

  consumers may choose to move away to other similar products. As a result, there would be a decrease in demand for the goods and services of the firm.

  demotivated workers ->less productive-> more costs

  legal costs -decrease supernormal profit
• What is a consequence of wage discrimination?

  greater inequality based on non economic factors is unfair (systematic discrimination)
• benefits of wage discrimination

  more profit, more employment