Question

What is the marginal cost of labor?

Short answer

It refers to the difference in total labour costs as a result of hiring someone else.

Step-by-step solution

Background

The conversion of inputs into outputs is a part of the manufacturing process. The manufacturing process necessitates the use of labor.

Explanation

As more workers are hired one after another, the Total Cost continues to climb. When one extra person is hired, the net rise in Total Cost is known as Marginal Cost.

Mathematically, it can be defined as $\frac{∆TC}{∆L}$

$∆TC$-Change in the total cost.

$∆L$-Change in the number of laborers.

Conclusion

As a result, it refers to the increased expenditures incurred when creating additional units of an item or service.