1 Preference-based discrimination in the labor market There are n > 0 competitive rms and two types of workers, type A (majority workers) and type B (minority workers). Each rm takes output price p and wages for each type of worker, 11),; and ring, as given and chooses how many workers of type A, L A , and how many workers of type B, L B, to hire in order to maximize prot: Pf(LA + LB) - wALA - 1113113, where f (L) = lnL is the production function. Note that workers of each type are perfect substitutes. Each worker inelastically supplies a unit of labor, and there are a total of N A > 0 workers of type A and N B > 0 workers of type B. Suppose that n = 100, p = 100, NA = 50,000, N3 = 20, 000. (a) Find the competitive equilibrium wages. Are there any type A and type B workers who work together in the same rm? (b) Now suppose that all rms are prejudiced against workers of type B and suffer a disutility dLB from hiring LB workers of type B. Find the competitive equilibrium wages. (Assume that d