Answer to Question #307866 in Microeconomics for lydia

Question

Derive the relationship between marginal cost, wage and marginal product of labor?

Answer 1

The relationship between marginal cost, wage, and the marginal product of labor can be derived as shown below;

$MC=\frac {W}{MPL}$

Where;

MC- marginal cost

W- wage

MPI- the marginal product of labor

When marginal product of labor is high it shows that productivity of labor is more hence the lower the marginal costs of producing output. The average cost here refers to costs per unit of output.