Principles of Microeconomics / Unit 13 MIC 1206 short lesson, about 20 seconds
Marginal Factor Cost in a Competitive Labor Market
Captions available
The idea
Marginal factor cost is what one more worker adds to total cost. In a competitive labor market the firm hires all it wants at the going wage, so marginal factor cost equals the wage and is constant.
In practice
The fiftieth worker costs one fifty, like the first.
Where people slip
The firm faces a flat labor supply at the wage; that constant is the exam's answer.
Your place on the trail
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