A firm increases its purchases of a factor of production in a perfectly competitive market from 10 units to 11 units.If the market price of the factor is $20 per unit, the marginal factor cost for the eleventh unit is:
A) $10.
B) $20.
C) $200.
D) $220.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the marginal factor cost is equal to the market price of the factor. Therefore, the marginal factor cost for the 11th unit is $20. Option B is the correct answer.

A Firm Increases Its Purchases of a Factor of Production