00:01
Hi, in this video we're going to be talking about discrimination in the free market, and whether the free market will encourage or discourage this type of behavior from happening.
00:13
The short answer is that generally the free market does discourage discrimination, and this is because of production costs.
00:23
Let's look at an example to see what we mean.
00:29
Let's say we have two groups of people, green workers and blue workers, and moreover, these two workers or these two types of workers are equally productive.
00:40
Now, let's say that we have firms a and b that are again the same in all aspects, except that firm a has a strong preference for green workers, well, firm b is completely okay with either one.
00:58
Since they need a certain level of quantities of workers, if firm a wants to fill all of these spots with green workers, they're going to have to pay them a higher wage.
01:14
This is to incentivize green workers to work for firm a and not firm b.
01:24
Since both firms are exactly the same in every other aspect and the workers are equally productive, then both firms are producing the same output quantity.
01:39
Because this is a competitive market, the price is fixed and it does not change within each firm...