how to calculate value marginal product of labor
Marginal product of labor
The marginal product of labor is directly related to costs of production . Costs are divided between fixed and variable costs . Fixed costs are costs that relate to the fixed input , capital , or rK , where r is the rental cost of capital and K is the quantity of capital . Variable costs ( VC ) are the costs of the variable input , labor , or wL , where w is the wage rate and L is the amount of labor employed . Thus , VC = wL . Marginal cost ( MC ) is the change in total cost per unit change in output or ∆ C / ∆ Q. In the short run , production can be varied only by changing the variable input . Thus only variable costs change as output increases : ∆ C = ∆ VC = ∆ ( wL ) . Marginal cost is ∆ ( Lw ) / ∆ Q. Now , ∆ L / ∆ Q is the reciprocal of the marginal product of labor ( ∆ Q / ∆ L ) . Therefore , marginal cost is simply the wage rate w divided by the marginal product of labor
The marginal product of labor is directly related to costs of production . Costs are divided between fixed and variable costs . Fixed costs are costs that relate to the fixed input , capital , or rK , where r is the rental cost of capital and K is the quantity of capital . Variable costs ( VC ) are the costs of the variable input , labor , or wL , where w is the wage rate and L is the amount of labor employed . Thus , VC = wL . Marginal cost ( MC ) is the change in total cost per unit change in output or ∆ C / ∆ Q. In the short run , production can be varied only by changing the variable input . Thus only variable costs change as output increases : ∆ C = ∆ VC = ∆ ( wL ) . Marginal cost is ∆ ( Lw ) / ∆ Q. Now , ∆ L / ∆ Q is the reciprocal of the marginal product of labor ( ∆ Q / ∆ L ) . Therefore , marginal cost is simply the wage rate w divided by the marginal product of labor