1.

In your own words, explain why a profit-maximizing firm will hire workers up to the
point where marginal revenue product of labour equals the nominal wage. Now
express this condition for profit maximization (by choice of the number of workers
hired) in real terms. Show that both conditions (in nominal terms and in real terms)
are the same. (4)
A profit maximising firms sole purpose is to earn profit. When the marginal revenue is equal
to the nominal wage, it shows that the workers are getting paid for how much they will earn
for the company. As a result, Profit maximising firms will pay at that level because they are
only willing to pay for how much the labour can earn, eliminating all other benefits. In terms
of profit maximising in real terms , it occurs when the marginal product is equal to the
marginal costs of hiring labour. Both conditions can be considered the same because of the
fact that real wage is just the nominal wage times the price of a good while marginal
revenue is equal to marginal product into price of a good. By dividing the price of a good, we
get the real term is equal to the nominal term.

The table below is from Statistics Canada in May 2022. Fill the empty cells. (4)
Labour force December January February March 2022 April 2022
characteristics 2021 2022 2022

Eligible 31,510.3 31,546.8 31,588.7 31,626.9 31,663.2

population,
thousands

Labour force, 20,612.3 20,517.9 20,648.2 20,677.3 20,686.3

thousands

Employment, 19,376.2 19,176.1 19,512.7 19,577.1 19,600.5

thousands

Unemployment, 1,236.1 1,341.8 1,135.5 1,100.2 1085.8

thousands

Unemployment 6% 6.5% 5.5% 5.3% 5.2%

rate %

Participation 65.4% 65% 65.4% 65.4% 65.3%

rate %

Employment 61.5% 60.8% 61.8% 61.9% 61.9%

rate %