Principles of Microeconomics / Unit 6 MIC 0518 short lesson, about 20 seconds
Why Marginal Cost Rises: Wage over Marginal Product
Captions available
The idea
When labor is the variable input, marginal cost equals the wage divided by the marginal product of labor. As marginal product falls, each extra unit needs more labor time, and marginal cost rises.
In practice
Sixty dollars over thirty loaves is two dollars; sixty over ten is six.
Where people slip
Rising marginal cost is diminishing marginal product in dollars. The two curves are mirror images.
Your place on the trail
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