AVERAGE FACTOR COST: Total factor cost per unit of factor input, found by dividing total factor cost by the quantity of factor input. Average factor cost, abbreviated AFC, is essentially the factor price. However, using the longer term average factor cost let's us see the connection with other terms, like total factor cost and marginal factor cost. See also | total factor cost | factor price | marginal factor cost | factor markets | perfect competition | monopsony | market control | average cost | law of diminishing marginal returns |
