Suppose that the labor supply curve for a large university in a small town is given by w = 60 + 0.08L, where L is number of units of labor per week and w is the weekly wage paid per unit of labor. If the university is currently hiring 1,000 units of labor per week, the marginal cost of an additional unit of labor

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

Suppose That the Labor Supply Curve for a Large University