Micro Help? (Not studyguide or anything like that)

Test Preparation AP Test Preparation
1

<p>So if W is wage, P is the output price, MP_L is the marginal product of labor, how do you express marginal cost (MC) of production in a perfectly competitive firm, in a short run, with these terms?</p>

<p>The answer is MC=W/MP_L. BUT WHY???</p>

<p>Thanks :)</p>

2

<p>MPL = (Marginal product)/(unit of labor)
Wage = cost of labor
Marginal cost= cost of producing the next unit of product</p>

<p>Wage/MPL = (cost of labor)/[(Marginal product)/(unit of labor)] = [(cost of labor)(unit of labor)]/(Marginal product) = cost of producing the next unit of product = Marginal cost</p>