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Microeconomics Question from Walter E. Williams:Edit

Explain how cost curves are "monetized" values of product curves.

AnswerEdit

True, because:

 MC = \frac{dTC}{dQ} = \frac{dTC}{dL} * \frac{dL}{dQ} = P_L * \frac{1}{\frac{dQ}{dL}} = P_L * \frac{1}{MP_L}


Because price determines the productivity of labor and that has a relationship with the wage, some expression of the two will be equal. But because of math (see above) they are reciprical.

equilibrium condition from the labor market:

 MP_L = \frac{W}{P}


Firm curves
Equations

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