Debunking the Wage Gap With Basic Economics

One of my subjects in the sixth form is Economics. I quite enjoy the subject, in particular, the theory of the firm in microeconomics. The fundamental assumption states that a firm’s motive is to maximize profits.

One way to maximize profits is to drive down costs. Specifically, firms can hire workers who are willing to afford lower wage rates. We can analyze this with the following supply and demand graph of labour.



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