The market wage rates for left-and right-handed workers are $10 and $15 per worker, respectively. The value of the marginal product of labor is 20 – 0.5L, where L is the total number of workers (it doesn’t matter if they’re left or right-handed).
a) What are the profit-maximizing levels of employment of left- and right-handed workers (how many of each would a nondiscriminatory employer hire)? If an employer has a discrimination coefficient of 0.7 against left-handed people, how many left- and right-handed workers does the employer hire?
b) If the price of output is 1, output is given by 20L – 0.25L2, and the only costs to the firm are its labor costs, what are the profits to a non-discriminatory employer? What are the profits of the employer who has a discrimination coefficient of 0.7?