If a Firm Refuses to Hire Minorities Due to Prejudice

question 36

Multiple Choice

If a firm refuses to hire minorities due to prejudice, its profits:

• A) tend to increase.
• B) tend not to be affected.
• C) tend to decrease.
• D) will increase slightly.

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Definitions:

Consumers Budget Constraint

A consumer's budget constraint represents the combination of goods and services they can afford with their income and prices.

Adverse Selection

A situation in economic theory where information asymmetry results in high-risk individuals being more likely to apply for insurance or credit, potentially leading to market failure.

Insurance

A financial product that provides protection against potential future losses or damages to individuals or property.

Klutzes

Describes persons who are clumsy, often making mistakes or causing accidents in a somewhat comical or endearing way.