If the supply function of input z to some monopsonist is 10 + 2z:
A)MFC = 10.
B)MFC = 4z.
C)MFC = 10 + 4z.
D)MFC = 10 + 2z.

Question

Quizplus · Accepted Answer

The Marginal Factor Cost (MFC) is derived from the supply function by taking the derivative and then adding the original function to it. The supply function is 10 + 2z, so the derivative is 2. Adding this to the original function gives MFC = 10 + 2z + 2z = 10 + 4z.

If the Supply Function of Input Z to Some Monopsonist