To maximize profits, a firm buying factors of production in a perfectly competitive factor market hires additional factors such that marginal factor cost is equal to marginal revenue product.

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This statement is true. In a perfectly competitive factor market, the price of a factor is equal to its marginal factor cost (MFC). Therefore, a firm will hire additional factors as long as the MFC of the factor is less than or equal to the marginal revenue product (MRP) of the factor, which is the additional revenue earned by the firm from using an additional unit of the factor. The firm will keep hiring factors until MFC = MRP, at which point it is maximizing profits.

To Maximize Profits, a Firm Buying Factors of Production in a Perfectly