What is the marginal cost of labor?

1 Answer
Oct 19, 2015

Additional cost made to the Total Cost due to the employment of one more labourer is called Marginal Cost of Labour.

Explanation:

As workers are employed one after another, the Total Cost keeps on increasing. The net increase in Total Cost when one additional worker employed is called Marginal Cost.

Algebraically, it can be stated as (DeltaTC)/(DeltaL)
DeltaTC ---Change in Total Cost
DeltaL-------Change in number of labourers.

It can also be stated as -

MC_n=TC_n-TC_(n-1)

Where -

MC_n Marginal Cost of the nth labourer
TC_n Total Cost of when 'n' number of labourers are empoyed
TC_(n-1) Total Cost of when 'n-1' number of labourers are empoyed