Suppose the short-run production function is q = L^0.5.If the marginal cost of producing the tenth unit is $5,what is the wage per unit of labor? A) $1 B) $0.5 C) $0.25 D) It cannot be determined without more information.

Question

Quizplus · Accepted Answer

In the short-run production function: q = L^0.5 Marginal product of labor (MPL) can be calculated as: MPL = ∂q/∂L = ^0.5 Marginal cost (MC) of producing the tenth unit is given as $5. MC = ∂C/∂q = 5 Using the relationship between MPL and MC in perfect competition: MC = w/MPL where w is the wage rate. Substituting the values, 5 = w/MPL = w/(^0.5) Solving for w, w = 5^0.5/MPL Substituting the given values, w = 5/(10 × S1 × S1 × P0.5 × U1) = $0.25 Hence, the wage per unit of labor is $0.25.

Suppose the Short-Run Production Function Is Q = L0

Suppose the Short-Run Production Function Is Q = L⁰