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Chapter3_Discussion_of_the_nominal_wage_versus_th

Chapter3_Discussion_of_the_nominal_wage_versus_th - o It is...

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Discussion of the nominal wage versus the real wage  Nominal wage  o Represented by the symbol “W”  (uppercase) o It is the marginal cost of hiring an additional unit of labour o Expressed in monetary terms Real wage o Represented by the symbol “w” (lower case) o It is the nominal wage (W)  divided by P  
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Unformatted text preview: o It is the wage rate expressed in terms of output o Sometimes the real wage is described as the number of units of output an hour’s worth of work can buy Example o Suppose a firm makes widgets o If W = $20 per hour and P = $10 per widget o The real wage w = 2 widgets per hour...
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