The Labor Supply Curve Faced by a Large Firm in a Small

The labor supply curve faced by a large firm in a small city is given by w = 160 + 0.02L, where L is the number of units of labor per week hired by the large firm and w is the weekly wage rate that it pays. If the firm is currently hiring 1,000 units of labor per week, then the marginal cost of a unit of labor to the firm

A) equals the wage rate plus $40.
B) equals the wage rate plus $20.
C) equals the wage rate.
D) is twice the wage rate.
E) equals the wage rate plus $60.

Correct Answer:

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