AP MicroeconomicsFactor Markets
Marginal Resource Cost
Marginal Resource Cost (MRC) is the additional cost a firm incurs by employing one more unit of a factor of production.
MRC is the change in total cost from hiring one more unit of a factor, such as labor. It includes all additional costs, not just the factor's price. Firms hire a factor up to the point where its MRP equals its MRC. In a perfectly competitive factor market the firm faces a horizontal factor supply curve and MRC equals the market price; under monopsony, MRC lies above the upward-sloping supply curve.
Formula / Example
MRC = ΔTC / ΔQ of factor
Interactive graph
Factor Markets →
Drag the curves and see it for yourself.
Study module
Factor Markets →
Full lesson, practice questions, and flashcards.