AVERAGE FACTOR COST CURVE: A curve that graphically represents the relation between average factor cost incurred by a firm for buying or hiring a factor of production and the factor quantity. Because average factor cost is essentially factor price, the average factor cost curve (in most circumstances) is also the factor supply curve facing the firm. This curve is constructed to capture the relation between average factor cost and the factor quantity, holding other variables constant. See also | curve | average factor cost | total factor cost | factor price | factor supply curve | marginal factor cost | factor markets | perfect competition | monopsony | market control | average cost |
