This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. Find sources: "Marginal factor cost" – news · newspapers · books · scholar · JSTOR(July 2010) (Learn how and when to remove this message)
In microeconomics, the marginal factor cost (MFC) is the increment to total costs paid for a factor of production resulting from a one-unit increase in the amount of the factor employed.[1] It is expressed in currency units per incremental unit of a factor of production (input), such as labor, per unit of time. In the case of the labor input, for example, if the wage rate paid is unaffected by the number of units of labor hired, the marginal factor cost is identical to the wage rate. However, if hiring another unit of labor drives up the wage rate that must be paid to all existing units of labor employed, then the marginal cost of the labor factor is higher than the wage rate paid to the last unit because it also includes the increment to the rates paid to the other units.
Thus for any factor the MFC is the change in total amount paid for all units of that factor divided by the change in the quantity of that factor employed.
A firm that wants to optimize its profits hires each factor up to the point at which its marginal factor cost equals its marginal revenue product (MFC=MRP).[2]
Marginal factor cost is an important concept in economics, as it helps to determine the optimal level of production for a good or service.
^"12.1 The Demand for Labor". Principles of Economics. 2016-06-17.
^"Marginal Revenue Product (MRP)". Corporate Finance Institute. Retrieved 2016-10-07.
and 27 Related for: Marginal factor cost information
In microeconomics, the marginalfactorcost (MFC) is the increment to total costs paid for a factor of production resulting from a one-unit increase in...
In economics, the marginalcost is the change in the total cost that arises when the quantity produced is increased, i.e. the cost of producing additional...
various types of cost curves, all related to each other, including total and average cost curves; marginal ("for each additional unit") cost curves, which...
cost of one additional unit of production is called marginalcost. The marginalcost can also be calculated by finding the derivative of total cost or...
Factorcost or national income by type of income is a measure of national income or output based on the cost of factors of production, instead of market...
Real wages List of sovereign states in Europe by net average wage Marginalfactorcost Overtime Political science: Labour power Proletarian Working class...
of production. Marginal revenue is a fundamental tool for economic decision making within a firm's setting, together with marginalcost to be considered...
diminishing returns are the decrease in marginal (incremental) output of a production process as the amount of a single factor of production is incrementally increased...
from common usage Factor market Factor world Labor demand Labor theory of value Labour economics Marginalfactorcost Means of production Microeconomics...
particular neoclassical economics, the marginal product or marginal physical productivity of an input (factor of production) is the change in output resulting...
axis. Marginal costs are often also shown on these graphs, with marginalcost representing the cost of the last unit produced at each point; marginal costs...
the amounts of physical capital and labor already in use. The marginal product of a factor of production is generally defined as the change in output resulting...
faces a market price equal to its marginalcost (P = MC). This implies that a factor's price equals the factor'smarginal revenue product. It allows for...
factor of production is equal to the marginal production of that factor. The marginal production of any factor depends on the amount of that factor that...
a basis weight of 48–80 g/m2 Manual fare collection in transport Marginalfactorcost Master of Finance and Control, a course in finance run by the Department...
Critical mineral raw materials Downcycling List of building materials Marginalfactorcost Material passport Materials science Nature Christophe Degryse, L'économie...
called the marginal revenue ( MR {\displaystyle {\text{MR}}} ), and the additional cost to produce that unit is called the marginalcost ( MC {\displaystyle...
chose to waste time. So it is adding more cost. The concept of marginalcost in economics is the incremental cost of each new product produced for the entire...
In economics and business decision-making, a sunk cost (also known as retrospective cost) is a cost that has already been incurred and cannot be recovered...
it has absolute market power and can set a price above the firm's marginalcost. The monopoly ensures a monopoly price exists when it establishes the...
responsibility for agent's action. Mathematically, social marginalcost is the sum of private marginalcost and the external costs. For example, when selling...
to other people. Optimum factor allocation output elasticity of factor costs marginal revenue product marginal resource cost Pricing and various aspects...
generating electricity in real time to meet demand.[citation needed] A costfactor unique to storage are losses that occur due to inherent inefficiencies...
Cost of living is the cost of maintaining a certain standard of living. Changes in the cost of living over time can be operationalized in a cost-of-living...
of factors affecting cost elements. By decision-making costs: These costs are used for managerial decision making: Marginal costs: The marginalcost is...
and direct factors. The Pareto optimum, therefore, is at the levels in which the social marginal benefit equals the social marginalcost. [citation needed]...
The outcome of the model equilibrium involved firms pricing above marginalcost; hence, the competitive price. In his review, Bertrand argued that each...