Download as ppt, pdf, txt or read online from scribd. What is the least cost combination of factors isoquants. We use your linkedin profile and activity data to personalize ads and to show you more relevant ads. The optimum input combination in this case is known as the least cost combination of inputs. The problem here is to find out a combination of inputs, which should cost the least, i. There are certain limitations to the principle of least cost combination. In the short run the firm can only change its labor and cannot choose the leastcost combination of capital and labor. Leastcost combination the problem of leastcost combination of factors refers to a firm getting the largest volume of output from a given cost outlay on factors when they are combined in an optimum manner.
The least cost combination or the optimum factor combination refers to the combination of factors with which a firm can produce a specific quantity of output at the lowest possible cost. This least cost combination of factors will be optimum for him. The problem here is to find out a combination of inputs. Useful notes on least cost combination of factors economies. Least cost and maximum output combinations of input. The profit maximization firm will choose the least cost combination of factors to produce at any given level of output. If you continue browsing the site, you agree to the use of cookies on this website. Least cost combination principle a rational firm would combine the various factors of production its production function. It solves the problem of how to produce it guides in the determination of least cost combinations of resources. It explains how losses can be minimized during the periods of price adversity. The firm can achieve maximum profits by choosing that combination of factors which will cost it the least. There are two methods of explaining the optimum combination of factor. Substitution of factors is not possible in the case of such factors.
Expansion path, ridgeline and least cost combination of inputs. Since the firms goal is to maximise profit, the optimum input combination for producing a particular quantity of its product would be one that would produce the output at the minimum possible cost. Ssc cgl, ssc cpo, ssc chsl and rrb ntpc 400 watching live now. Given isocost line and the series of isoquants isoquantmap, the producer will choose the level of output, where the given isocost line is tangent to the highest possible isoquant. Production function, leastcost combination of resources, and. In this way, the producer maximises his profits and produces a given level of output with least cost combination of factors. Isocost line k1l1 is just not relevant because the output level represented by the isoquant p is not producible by any factor combination. Least cost combination free download as powerpoint presentation. Leastcost combination of production learn economics. Expansion path, ridgeline and least cost combination of inputs vii least cost combination. The slope of the isocost line is the relative price of capital and labor. Batch trigonometry part 1 best tricks ssc cgl maths maths for ssc cgl ssc adda. In the theory of production, a producer will be in equilibrium when, given the costprice function, he maximizes his profits.
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