The amount a factor adds to a firm's total cost per period is called:

Question

Quizplus · Accepted Answer

Marginal factor cost refers to the additional cost incurred by a firm when it hires an additional unit of a factor of production, such as labor or capital. This cost takes into account the increase in the total cost due to the additional factor unit. Therefore, A is the correct answer. B) marginal cost refers to the additional cost of producing one more unit of output, and D) marginal fixed cost refers to the change in total fixed cost due to producing one more unit of output. C) MFR is not a commonly used acronym in economics and does not make sense in this context.

The Amount a Factor Adds to a Firm's Total Cost