When labour is the only input a firm uses, the marginal cost of a unit of output can be defined as:

Question

Quizplus · Accepted Answer

The marginal cost (MC) of a unit of output, when labor is the only input, is the additional cost of producing one more unit of output. This is calculated as the wage paid to the labor (the cost of the additional labor needed) divided by the marginal product of labor (the additional output produced by the additional labor), hence A) wage / (marginal product of labour) is correct.

When Labour Is the Only Input a Firm Uses, the Marginal