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

Marginal cost (MC) is the cost of producing one additional unit of output. 
Given MC of producing the tenth unit is $5, we need to find the wage per unit of labor (L). 
MC = Wage / MPL (Marginal Product of Labor) 
10th unit implies L = 10
5 = Wage / (10 * 1 * 1^0.5 * 1^10.5 * 1 * 1^0) 
Wage = 0.25

Suppose the Short-Run Production Function Is Q = L0

Suppose the Short-Run Production Function Is Q = L⁰