Suppose a firm can hire 100 workers at $8.00 per hour but must pay $8.05 per hour to hire 101 workers. Marginal factor cost (MFC) for the 101st worker is approximately equal to:

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Quizplus · Accepted Answer

The MFC for the 101st worker is calculated by the additional cost to hire one more worker, which includes the extra $0.05 per hour for the 101st worker plus the additional $0.05 per hour for the initial 100 workers (since the wage rate increases for all workers, not just the 101st). Therefore, MFC = $0.05 * 101 = $5.05 + $8.00 (the original wage for the 100 workers) = $13.05.

Suppose a Firm Can Hire 100 Workers at $8