Why are economists interested in increasing marginal costs?

Accounting Dec 08, 2020

Expert Solution

wL= total cost, w= wage rate, L= labor supply

marginal cost = dC/dq= w. dL/dq= w/dq/dL= w/ marginal productivity of labor.

And the profitable portion of the total productivity curve is the one where the curve is positive and declining, the second stage of production. This implies that marginal cost will be positive and increasing as the denominator is decreasing as explained above.

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