Suppose the short-run production function is q = 8L0.5. If the marginal cost of producing the...
Suppose the short-run production function is q = 8L0.5. If the marginal cost of producing the 20th unit is $12, what is the wage per unit of labor?
Homework Answers
The short-run production function is q = 8L^(0.5)
The marginal product of the labor is MPL = dq/dL = 8*(0.5)L^(0.5-1)
=4L^(-0.5)
At L = 20, the marginal product of the labor is MPL = 4L^(-0.5)
=4*(20)^(-0.5)
=0.894427191
MC(L=20) = $12
Hence, the wage per unit of labor = W = MC*MPL = $12*0.894427191 = $10.73312629
Thus, the wage per unit of labor is $10.73312629
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