The marginal factor cost of labor will exceed the wage rate when the firm has to increase its wage offers in order to attract new employees.

Name: The marginal factor cost of labor will exceed the wage rate when the firm has to increase its wage offers in order to attract new employees.
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Question

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When a firm increases its wage offers to attract new employees, it must pay the higher wage to all workers, not just the new ones, increasing the marginal factor cost above the wage rate.

The Marginal Factor Cost of Labor Will Exceed the Wage