What is the difference between statistical and taste-based ...

[penguins]

What is the difference between statistical and taste-based discrimination? The owner of a company that manufactures automobile parts states that it will not hire gay or lesbian employees.
 
  Is this an example of statistical or taste-based discrimination?

Question 2

Automatic fiscal policy ________.
 
  A. requires an action of the government
  B. is weak unless the government cuts its outlays to reduce the deficit
  C. operates as the economy moves along its business cycle
  D. reduces the deficit as the economy goes into recession

[mcarey591]

Answer to Question 1

Employers that practice taste-based discrimination are willing to forego profits when they do so. Employers engaging in statistical discrimination, however, are trying to enhance their profits. Suppose black employees are more productive than white employees, on average. An employer who practices taste-based discrimination and is prejudiced against black employees will not hire a black employee even if he is more productive. An employer who practices statistical discrimination will use the data on productivity to hire only black employees.
This is probably an example of taste-based discrimination. Taste-based discrimination occurs when people's preferences or prejudices cause them to discriminate against a certain group. Statistical discrimination occurs when employers use an observable variable (race) to help determine if the person will be a good employee. For example, an employer may use the statistical average of black or white applicants to determine the productivity of a black or white individual. These expectations cause people to discriminate against a certain group.

Answer to Question 2

C Answer C is essentially the definition of automatic fiscal poli-cy.