Assume that the labor market for barbers is competitive and that it is differentiated into two groups:

Business

1 answer:

ehidna [41]3 years ago

4 0

Answer and Explanation:

I will go through each and every option explaining the reasons and what option would be the best:

The (a) part says 'difference in wages will eventually disappear since a haircut is a homogeneous good' - This is not true because even though it is an homogeneous product, some customers do have a strong preference for barbers who are not going bald. Therefore, they know their worth and they would want to capitalize on that and get paid just a bit more than bald barbers.

The (b) part says 'barbershops that hire barbers with hair will be able to charge a higher price for a haircut to those consumers who have a strong preference for barbers with hair'. - If the barbershop charges higher price for barbers that have hair then the customers will prefer bald barbers as the questions mentions that there is high competition and since it is an homogeneous, customers would be willing to save money and get their haircut from some other barber.

The (c) part says 'barbershops that hire bald barbers will always be much more profitable' - Not necessarily. The reason is that some customers have a strong preference for barbers who are not bald and therefore, that would help barbershops who have barbers with hair to be a bit more profitable as some additional customers would want their services.

The (d) part says 'barbershops that hire barbers with hair will always be much more profitable' - This is the best option and the reason for it is because some customers have a strong preference for barbers with hair and that would help the barbershop to earn more. They would have the customers who already indifferent to whoever cuts their hair and in addition to that, they would also have the customers who have their preference.

Hence the answer is D.

You might be interested in

The city of ann arbor michigan buys a police car manufactured in germany. in the gdp accounts this transaction is included in

Xelga [282]

Government expenditures and imports

4 0

2 years ago

Robin Company has $100,000 of income before payment of $100,000 of reasonable salaries to its owners employees (who are in the 3

miv72 [106K]

Answer:

d. a., b, and c. all result in the same amount of tax.

Explanation:

The question is to determine the form of business

First we need to understand some terms

A C Corporation refers to a standard corporation as far as the IRS is concerned while the S Coproration is a corporation with a special tax status giving it some tax privileges with the IRS. We however, group organisations as either C or S based on the taxation code with the Internal Revenue Service

It should be noted that C corporation, S corporation and partnership all aply the same rate of tax. The only place of advantage or difference is in the area of how the tax is treated and the difference in their liability.

As such, the owner in the question is being taxed based on the 32% bracket and as such it affects all the forms of business structures. Therefore, Partnership. C corporation and S corporation will asll result in the same amount of tax.

6 0

3 years ago

Which of the following are necessary for production to take place?

zubka84 [21]

The answer i your question is B I believe

8 0

3 years ago

Ben lives in a state that has a no-fault auto insurance law. another motorist failed to yield the right of way, and hit his car.

Sophie [7]

EIsenI’m sexlurzmbznqeAnswer:

Explanation:

3 0

3 years ago

Tangible and intangible benefits are defined as: a. None of these choices b. Tangible costs (benefits) can be reasonably quantif

Nata [24]

Answer: All of these choices are correct.

Explanation:

Tangible benefits are benefits that can easily be measured by an individual such as: cash and property while Intangible benefits are those benefits that can't easily be measured in units such as: security, experience, satisfaction.

4 0

2 years ago