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

Insurance Premiums, Green Shield Insurance gives NEMO Corporation with cove...

Green Shield Insurance gives NEMO Corporation with coverage for prescriptions, dental work, and extended health services. Every subscriber uses $435 worth of dental services per ye

Managerial Economics, Calculate point elasticity of demand for demand funct...

Calculate point elasticity of demand for demand function Q=10-2p for decrease in price from Rs 3 to Rs 2

Show the characteristics of monopoly, Q. Show the Characteristics of monopo...

Q. Show the Characteristics of monopoly? Let's summarise the main characteristics of monopoly as under: Cross-elasticity of demand for a monopoly product is zero in the

Bain''s model of limit pricing, Bain''s limit pricing theory advantages and...

Bain''s limit pricing theory advantages and disadvantages

The acceleration principle, THE ACCELERATION PRINCIPLE Suppose that th...

THE ACCELERATION PRINCIPLE Suppose that there is a given ratio between the level of output Y t at any time t , and the capital stock required to produce it K t and that

Give brief description about economics, Economics is generally defined as t...

Economics is generally defined as the problem of how best to allocate limited resources, limited because needs are characterized as unlimited, but common sense tells us that rather

Institutional intervention theories, The institutional intervention theorie...

The institutional intervention theories Collective bargaining provides an example of what is sometimes called bi- lateral monopoly; the trade union being the monopolist suppli

Factors influencing demand for a product, Factors influencing demand for a ...

Factors influencing demand for a product These are broadly divided into factors determining household demand and factors affecting market demand . Factors affecting hou

Eceonomic therios, Ask questiHow does economic theory contribute to manager...

Ask questiHow does economic theory contribute to managerial decisions? on #Minimum 100 words accepted#

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