Refer to Scenario 19-6. Long-run competition in the after-school tutoring market is consistent with which of the following statements, assuming consumers do not discriminate between male and female tutors?

A) Tutoring centers only hiring male tutors have lower cost, leading to an increase in the demand for male tutors.
B) All firms that hire only male tutors will shut down because they are not able to compete.
C) All firms that hire only female tutors will shut down because they are not able to compete.
D) Nothing will change; all firms will continue to operate as they do now.

Question

Hendy Bryan Fanfan · Accepted Answer

Final Answer : B, Explanation :  In the long run, firms that discriminate by only hiring male tutors at a higher wage will have higher costs compared to firms that hire the cheapest tutors regardless of gender. If consumers do not discriminate between male and female tutors, firms that do not discriminate will have a cost advantage and can offer the same service at a lower price, making it difficult for firms that only hire male tutors to compete.

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