-Refer to the above table. What is the marginal factor cost when the firm employs the third unit of labor?

Question

Quizplus · Accepted Answer

Marginal factor cost is the change in total factor cost divided by the change in the quantity of the factor employed. In this case, the change in total factor cost is $57 - $32 = $25, and the change in the quantity of labor employed is 3 - 2 = 1. Therefore, the marginal factor cost is $25 / 1 = $25.

-Refer to the Above Table