Asked by Abigail Aleman on May 02, 2024
Verified
Suppose that the labor supply curve for a large university in a small town is given by w 60 0.08L, where L is number of units of labor per week and w is the 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) is twice the wage rate.
C) equals the wage rate plus $160.
D) equals the wage rate plus $80.
E) equals the wage rate plus $240.
Labor Supply Curve
Represents the relationship between the quantity of labor supplied and the wage rate in a given period.
Marginal Cost
An adjustment in the total expenses resulting from producing one additional unit.
Weekly Wage
The amount of compensation a worker receives at the end of each week for their labor.
- Acquire knowledge on the role of labor supply curves in shaping wage rates and labor expenditures.
- Acknowledge the contribution of marginal costs to the decision-making procedures in monopolistic organizations.
Verified Answer
YD
Yuliani dwiutamiMay 09, 2024
Final Answer :
D
Explanation :
The marginal cost of an additional unit of labor is the derivative of the labor supply function with respect to L. Taking the derivative, we get MC = w + 0.08L. At 1,000 units of labor per week, we can plug in L = 1,000 to find MC = w + 0.08(1,000) = w + 80. Therefore, the marginal cost of an additional unit of labor is the wage rate plus $80, so the answer is D.
Learning Objectives
- Acquire knowledge on the role of labor supply curves in shaping wage rates and labor expenditures.
- Acknowledge the contribution of marginal costs to the decision-making procedures in monopolistic organizations.
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