Which of the following best describes the marginal cost of hiring an additional worker?

• A. The decrease in average cost when one more worker is hired
• B. The wage paid to all workers
• C. The increase in total cost resulting from employing one more worker
• D. The total cost divided by the number of workers

Answer: (C)

Verified step by step guidance

1. Understand the concept of marginal cost in the context of labor: Marginal cost refers to the additional cost incurred by employing one more unit of input, in this case, one more worker.
2. Recall that total cost (TC) includes all costs associated with production, such as wages paid to workers and other expenses.
3. Define the marginal cost of hiring an additional worker as the change in total cost when the number of workers increases by one. Mathematically, this is expressed as \(\Delta TC = TC_{n+1} - TC_n\), where \(n\) is the current number of workers.
4. Recognize that the marginal cost is not the average cost or the wage paid to all workers, but specifically the increase in total cost due to hiring one more worker.
5. Therefore, the marginal cost of hiring an additional worker is best described as the increase in total cost resulting from employing one more worker.