Question

What is the marginal cost of labor?

Answer 1

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