JAMB Economics 2024 Paper

Concept:A profit-maximising employer hires labour until the extra revenue from the last worker equals the extra cost of that worker.Explanation:In perfect competition, the wage rate $W$ is constant for the firm.The extra revenue from one more worker is the marginal revenue product of labour: $\mathrm{MRP}_L = \frac{\Delta TR}{\Delta L}$.The extra cost of one more worker is the wage: $W = \frac{\Delta TC}{\Delta L}$.The firm should keep hiring while $\mathrm{MRP}_L > W$, because each worker adds more to total revenue than to total cost.The firm reaches maximum profit when $\mathrm{MRP}_L = W$.At this point, the last unit of labour hired adds exactly the same amount to total revenue as it adds to total cost.Hiring beyond this point would add more to total cost than to total revenue and reduce profit.Answer:B. as much to TR as to TC