Least cost factor combination, Managerial Economics

Assignment Help:

Producers Equilibrium or Optimal Combination of Inputs 

The analysis of production function has demonstrated that alternative combinations of factors of production that are technically efficient can be used to produce a given level of output. Of these, firm will have to choose that combination of factors that will cost it the least. In this way firm can maximise its profits. Choice of any particular method from a set of technically efficient methods is an economic one and it's based on the prices of factors of production at a specific time.

Firm can maximise its profits either by maximising the level of output for a given cost or by minimising the cost of producing a given output. In either case, factors would have to be used in optimal combination at which the cost of production will be minimum.

There are two ways to determine the least cost combination of factors to produce a given output. Which is,

  • Finding the total cost of factor combinations
  • Geometrical method

Related Discussions:- Least cost factor combination

External debt problem, External Debt Problem External debt refers to d...

External Debt Problem External debt refers to debt owing by one country to another.  External debt is a more serious problem than internal debt because the payment of interest

Question, what is deadweight loss calculation?

what is deadweight loss calculation?

Commodity-related shortfalls in export earnings, A complementary facility f...

A complementary facility for commodity-related shortfalls in export earnings This is the most recent proposal of the Group of 77 at UNCTAD in June 1979.  There they requested

Sales maximization, how realistic is the sales maximisation model from your...

how realistic is the sales maximisation model from your experience with business objectives as persued by firms

General and selective credit control, General and Selective Credit Control ...

General and Selective Credit Control These are imposed with the full apparatus of the law or informally using specific instructions to banks and other institutions.  For insta

Short run cost curve, Ajax has the following short run cost curve when tc=8...

Ajax has the following short run cost curve when tc=800000-5000Q+100Q2

What is technical economies, Q. What is Technical Economies? The signif...

Q. What is Technical Economies? The significant technical economies result from the use of specialised capital equipment that comes into effect only when output is produced on

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd