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

Gross domestic product, Gross Domestic Product A measure of national ec...

Gross Domestic Product A measure of national economic activity, GDP is measured from two approaches. GDP can be viewed as the total value of all goods and services produced in

Price discrimination, Let there be two consumers A and B, each buying at mo...

Let there be two consumers A and B, each buying at most two units of a good. A values having one unit at £10 and having two units at £12 whereas B values having one unit at £8 and

Reasons for fluctuations in agricultural prices, REASONS FOR FLUCTUATIONS I...

REASONS FOR FLUCTUATIONS IN AGRICULTURAL PRICES Production depends on factors beyond the control of the producers e.g. weather, disease and pests.  Actual and planned output i

Determine the perfectly competitive firms profit, 1. Suppose in a perfectly...

1. Suppose in a perfectly competitive industry the market demand and supply forces combine to produce a short-run equilibrium price of Rs 70. Suppose that a firm in this industry h

Functions of central bank , FUNCTIONS OF CENTRAL BANK Economists and f...

FUNCTIONS OF CENTRAL BANK Economists and financial experts lack in unanimity about the functions of a central bank. According to Kisch and Elkin, the essential function of a c

Liquidity and the multiple contraction of deposits, Liquidity and the multi...

Liquidity and the multiple contraction of deposits Many of the instruments of monetary policy depend upon limiting liquidity, which has a multiple effect upon bank' deposits t

What is the reasons for shift in demand curve, Reasons for Shift in Demand ...

Reasons for Shift in Demand Curve Shifts in a price-demand curve may occur due to the change in one or more of other determinants of demand. Consider, for illustration, decreas

Factors affecting the ability of trade unions, FACTORS AFFECTING THE ABILIT...

FACTORS AFFECTING THE ABILITY OF TRADE UNIONS TO GAIN LARGER WAGE INCREASES FOR ITS MEMBERS The basic factor is elasticity of demand for the type of labour concerned.  The ela

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