1.7. It is commonly said that women earn 80 cents for every dollar that a man earns, even when doing the same job. Let's assume this is literally true in order to see how an entrepreneur would respond to this fact.

a. Netrovia, a battery manufacturer, has an all-male workforce. It pays $10 million per year in salary to these men, and has annual profits of $1 million. You've just been hired as an outside consultant to help N etrovia raise its profits. Your advice is to fire all the men and replace them with women. If N etrovia followed your ad vice, what would Netrovia's salary costs fall to? How much would this decision raise Netrovia's profits?

b. After your success at Netrovia, you start getting a lot more consulting jobs. You give the same advice to all the companies looking to boost profits: Fire your men and hire an all-female workforce for 20% less. What will this do to the demand for female labor? And what will this tend to do to women's wages?