The conditions necessary for wage discrimination
Wage discrimination means paying different groups different wages for the same work. Three conditions must all be present before an employer can do this successfully.
Real World
In the early 20th century, US baseball clubs acted as monopsonist employers of Black and white players in segregated leagues, separating labour supply curves by race and paying Black players significantly less for equivalent performance.
Exam Focus
List all three conditions explicitly — separability, monopsony power, and different supply elasticities — examiners expect each one named and explained.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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