Oklahoma State University Advance Programmed Learning System (APLS)
Amos-Amos
Two More Factor Cost
The Highlights
Two measures derived from
total factor cost are
average factor cost and
marginal factor cost. The definition of
average factor cost.
Average factor cost is the total factor cost per unit of factor input, found by
dividing total factor cost by the
quantity of factor input.
The formula for average factor cost (AFC):
AFC
=
total factor cost (TFC)
factor quantity (FQ)
Average factor cost is another way of saying factor
price.
The definition of
marginal factor cost.
Marginal factor cost is the change in total factor cost resulting from a
change in the quantity of factor input, found by dividing the change in total
factor cost by the change in quantity of factor input.
The formula for marginal factor cost (MFC):
MFC
=
change in total factor cost
change in factor quantity
Marginal factor cost is the change in the total factor cost from a change in
factor quantity.

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- Fall '14
- Dr.OrleyAmos
- Economics, AFC, factor cost