According to Khurso (1964) and Olukosi & Ogungbile (1989), the emphasis of resource use is on marginal productivity because it is the most economical and optimal way to maximize net output in farming and it is obtained by relating the marginal value product to the input price, also called the marginal factor Cost
The entire basis of labor economics is that a firm will hire an employee as long as the employee's marginal revenue product, the value he produces, is at least as great as his marginal factor cost
, or his wage/salary.
Allotment efficiency occurs when a firm chooses resources and enterprises in such a way that a given resource is considered efficiently utilized in production if its marginal value product (MVP) is equal to its marginal factor cost (MFC) [10, 14].
r = efficiency ratio; MVP = marginal value product of the variable input; MPP = marginal physical product; MFC = marginal factor cost, [P.sub.xi] (Unit price of input [X.sub.i]); [Q.sub.m] = mean value of output; [X.sub.mi] = mean value of input considered; [P.sub.Q] = unit price of output; [[beta].sub.i] = output elasticities.
Allocative efficiency is determined by comparing the value of marginal product of factor i (VM[P.sub.i]) with the marginal factor cost
Similarly, optimization over C is reflected by an equality of the marginal factor cost of C, [MFC.sub.C], and its s hadow value, [Z.sub.C]: [MFC.sub.C]=[p.sub.c] + C*[partial][p.sub.c]/[partial]C=[Z.sub.C]=-[partial]VC/[partial]C (where the input shadow value is defined as in Lau 1978).
The pricing equation for C, as discussed previously, is based on the profit-maximizing equality of the marginal factor cost and shadow value of C: [p.sub.c] = - C*[[delta].sub.Pc]/[delta]C - [delta]VC/[delta]C, or (26)
He interprets this to mean that Marshall had in mind, to use modern terminology, a 'marginal factor cost
' equals 'marginal revenue product' construction and was well aware that differences between price and marginal revenue (in the product market) and the wage and marginal factor cost
(in the factor market) could be significant in a single-price market.
The term in brackets is the marginal factor cost
 In one or more input markets, including the labor market, the firm is assumed to perceive that a rising supply price causes marginal factor cost
to exceed average factor cost.
Moreover, it is important to recognize that assumptions five and six imply that the organ supply curve is kinked at [Mathematical Expression Omitted].(5) As a result, the marginal factor cost
curve for organs faced by the monopsonist hospital will exhibit a gap at this level of organ procurement.
The location effect of wage discrimination on employment can be depicted more clearly by using the SMFC-DMFC (simple monopsonist's marginal factor cost
curve-discriminating monopsonist's marginal factor cost
curve) approach, [2; 3].