The cost efficiency of labor is equal to the

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Quizplus · Accepted Answer

The cost efficiency of labor is determined by the MPP of labor (Marginal Physical Product) divided by the wage rate. This is because cost efficiency refers to how much output can be produced for every dollar spent on labor. Therefore, the higher the MPP of labor (meaning more output can be produced), the more cost efficient labor is. However, if the wage rate is also high, then the cost efficiency may be lower. Dividing the MPP by the wage rate gives us a measure of output per dollar spent on labor, which is a good indicator of cost efficiency.

The Cost Efficiency of Labor Is Equal to the