Leastcost combination of production learn economics. There are two methods of explaining the optimum combination of factor. Production function, leastcost combination of resources, and. Least cost combination free download as powerpoint presentation. Isocost line k1l1 is just not relevant because the output level represented by the isoquant p is not producible by any factor combination. Ssc cgl, ssc cpo, ssc chsl and rrb ntpc 400 watching live now. The problem here is to find out a combination of inputs, which should cost the least, i.
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. Least cost and maximum output combinations of input. Batch trigonometry part 1 best tricks ssc cgl maths maths for ssc cgl ssc adda. If you continue browsing the site, you agree to the use of cookies on this website. In this way, the producer maximises his profits and produces a given level of output with least cost combination of factors. The optimum input combination in this case is known as the least cost combination of inputs. This least cost combination of factors will be optimum for him.
The problem here is to find out a combination of inputs. Substitution of factors is not possible in the case of such factors. There are certain limitations to the principle of least cost combination. In the theory of production, a producer will be in equilibrium when, given the costprice function, he maximizes his profits.
We use your linkedin profile and activity data to personalize ads and to show you more relevant ads. Least cost combination principle a rational firm would combine the various factors of production its production function. 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. 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.
It solves the problem of how to produce it guides in the determination of least cost combinations of resources. In the short run the firm can only change its labor and cannot choose the leastcost combination of capital and labor. Least cost combination of factors and output maximisation. What is the least cost combination of factors isoquants. 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. Useful notes on least cost combination of factors economies. 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. 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. Download as ppt, pdf, txt or read online from scribd. The factor kn represents the change in output when all inputs are changed by the factor k. Expansion path, ridgeline and least cost combination of inputs. Least cost combination labour economics profit economics. The profit maximization firm will choose the least cost combination of factors to produce at any given level of output.
835 1053 461 1357 1485 1447 872 1227 211 1424 1518 516 749 547 774 600 1223 5 634 608 949 1207 1385 129 624 646 109 527 1501 1380 44 512 423 490 1120 723 1044 743 542 173 202 1486 1396 208 1144