Suppose that the labor supply curve for a large university in a small town is given by w  160  0.05L, where L is number of units of labor per week and w is he weekly wage paid per unit of labor.If the university is currently hiring 1,000 units of labor per week, the marginal cost of an additional unit of labor

A) equals the wage rate.
B) equals the wage rate plus $50.
C) is twice the wage rate.
D) equals the wage rate plus $100.
E) equals the wage rate plus $150.

The marginal cost of an additional unit of labor is equal to the derivative of the labor supply curve with respect to L. Taking the derivative of w  160  0.05L with respect to L, we get:
MC = 160 + 0.05wL
Plugging in L=1000 (the current number of units of labor) and w= $160 (from the labor supply curve), we get:
MC = 160 + 0.05(160)(1000)
MC = 8,160
Therefore, the marginal cost of an additional unit of labor is $8,160. However, this is the total cost and not the wage rate. Since the university is currently hiring 1,000 units of labor per week, the wage rate is equal to the total labor cost divided by 1,000. Thus, the wage rate is:
Wage rate = total labor cost / 1,000
Wage rate = (160)(1,000) / 1,000
Wage rate = $160
Adding the marginal cost to the wage rate, we get:
MC + Wage rate = $8,160 + $160
MC + Wage rate = $8,320
This is equivalent to choice (B) - the wage rate plus $50. Therefore, the best choice is (B) because it correctly calculates the marginal cost of an additional unit of labor as the wage rate plus $50.