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Chapter 14: Q.23 (page 350)

What is the marginal cost of labor?

Short Answer

Expert verified

It refers to the difference in total labour costs as a result of hiring someone else.

Step by step solution

01

Background

The conversion of inputs into outputs is a part of the manufacturing process. The manufacturing process necessitates the use of labor.

02

Explanation

As more workers are hired one after another, the Total Cost continues to climb. When one extra person is hired, the net rise in Total Cost is known as Marginal Cost.

Mathematically, it can be defined as ∆TC∆L

∆TC-Change in the total cost.

∆L-Change in the number of laborers.

03

Conclusion

As a result, it refers to the increased expenditures incurred when creating additional units of an item or service.

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Most popular questions from this chapter

What is the marginal cost of labor for a firm that operates in a competitive labor market? How does this compare with the MCL for a monopsony?

Describe how the earnings gap between blacks and whites has evolved in recent decades.

How does monopsony affect the equilibrium wage and employment levels?

Table 14.12 shows the quantity demanded and supplied in the labor market for driving city buses in the town of Unionville, where all the bus drivers belong to a union.

Wage per hourQuantity of workers demandedQuantity of workers supplied
\(1412,0006,000
\)1610,0007,000
\(188,0008,000
\)206,0009,000
\(224,00010,000
\)242,00011,000
  1. What would the equilibrium wage and quantity be in this market if no union existed?
  2. Assume that the union has enough negotiating power to raise the wage to $4 per hour higher than it would otherwise be. Is there now excess demand or excess supply of labor?

How does a bilateral monopoly affect the equilibrium wage and employment levels compared to a perfectly competitive labor market?
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