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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,
Fixed Costs (FC) These are costs which do not vary with the level of production i.e. they are fixed at all levels of production. They are associated with fixed factors of p
The pigou effect, also called the real balance effect, is named after the well known Cambridge school economist Arthur Cecil pigou who had first clearly formulated the relationship
critically analysis the profit maximisation theory of business firm and illucidet the role of profit in business
what are the instruments variable of marrise''s model?
Consumer Equilibrium To demonstrate the consumer's equilibrium i.e. the point at which the consumer maximizes utility with a given budget, we need to combine the indifference
COSTS OF UNEMPLOMENT AND INFLATION In an economy both unemployment and inflation have adverse effects and policy makers formulate policy instruments to contain both
Average Revenue (AR) This is the revenue per unit of the commodity sold. It is obtained by dividing Total Revenue by total quantity sold. For a firm in a perfectly competiti
Utility Utility is the amount of satisfaction derived from the consumption of a commodity or service at a particular time. Utility is not inherent but a psychological satisfa
Given the following payoff matrix (a) indicate the best strategy for each firm (b) why is the entry deterrent threat by firm Ato lower the pruce not credible
Number 1 work: Week 4 Discussion - Empirical Demand Function and Forecasting The empirical demand function can be used in conjunction with historical data to predict pricing and
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