Question: (This problem is somewhat advanced.) Using symbols, we can write that the marginal product of labor is equal to DQ>DL. Marginal cost is equal to

(This problem is somewhat advanced.) Using symbols, we can write that the marginal product of labor is equal to DQ>DL. Marginal cost is equal to DTC>DQ. Because fixed costs by definition don’t change, marginal cost is also equal to DVC>DQ. If Jill Johnson’s only variable cost (VC)

is labor cost, then her variable cost is just the wage multiplied by the quantity of workers hired, or wL.

a. If the wage Jill pays is constant, then what is DVC in terms of w and L?

b. Use your answer to question

a. and the expressions given above for the marginal product of labor and the marginal cost of output to find an expression for marginal cost, DTC/DQ, in terms of the wage, w, and the marginal product of labor, DQ>DL.

c. Use your answer to question

b. to determine Jill’s marginal cost of producing pizzas if the wage is $750 per week and the marginal product of labor is 150 pizzas. If the wage falls to $600 per week and the marginal product of labor is unchanged, what happens to Jill’s marginal cost? If the wage is unchanged at $750 per week and the marginal product of labor rises to 250 pizzas, what happens to Jill’s marginal cost?

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