Marginal factor cost is the:
A) amount a factor adds to a firm's total revenue per period.
B) change in the quantity of the factor divided by the change in total cost.
C) change in total cost divided by the change in the quantity of the factor.
D) same as marginal fixed cost.

Question

Quizplus · Accepted Answer

Marginal factor cost is the change in total cost divided by the change in the quantity of the factor. It reflects the additional cost incurred by the firm when it hires one more unit of a factor of production. It helps firms to determine the optimal level of factor inputs required for production.

Marginal Factor Cost Is The