The labor supply curve faced by a large firm in a small city is given by w = 60 + 0.08L, where L is the number of units of labor per week hired by the large firm and w is the weekly wage rate that it pays. If the firm is currently hiring 1,000 units of labor per week, then the marginal cost of a unit of labor to the firm

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The marginal cost of labor is the derivative of the total cost with respect to labor. The wage equation is w = 60 + 0.08L. The marginal cost is w + L(dw/dL) = 60 + 0.08L + L(0.08) = 60 + 0.16L. At L = 1000, MC = 60 + 0.16(1000) = 60 + 160 = 220. The wage at L = 1000 is 60 + 0.08(1000) = 140. Therefore, the marginal cost is 140 + 80 = 220, which is the wage rate plus $80.

The Labor Supply Curve Faced by a Large Firm in a Small