Answer to Question #315333 in Microeconomics for lydia

Question

Derive the relationship between marginal cost, wage and marginal product of labour

Answer 1

Answer.

Marginal cost as used in economics refers to the changes in production occurring as a result of including additional unit of production.

Marginal labour on the other hand represents the difference and change in output that come about as a result of employing an added labour .Marginal labour depends entirely on labour already in use and physical capital.

Lastly, marginal wage is the change in costs of labour that arise from employing extra workers.

The relationship between the above is summarized as : MC =w/MPI ,where the higher the marginal labour leads to lower marginal production cost .