Question

Marginal factor cost (MFC) is

A. the additional cost generated by producing an additional unit of output.
B. the additional revenue generated by employing an additional factor unit.
C. the additional cost generated by employing an additional factor unit.
D. total cost from the production of a product divided by the total number of factor units used.

Answer 1

c

Step-by-step explanation:

Marginal factor cost (MFC) is the change in total cost as a result of employing one more unit of a factor of production.

Marginal factor cost is determined by dividing the change in total cost by the change in factor of production.

Imagine that total cost is 100 when there are 2 units of labour employed. total cost increases to 200 when 3 units of labour are employed.

the marginal factor cost =
`(200 - 100)/(3 - 2)` = 100

Marginal cost is the additional cost generated by producing an additional unit of output.

Marginal factor revenue is the additional revenue generated by employing an additional factor unit.

Average factor cost is total cost from the production of a product divided by the total number of factor units used.