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In order to determine the best combination of capital and labor to produce that output, one has to know the amount of finance available to the producer to spend on the inputs and also the prices of the input. Suppose that the producer has at its disposal Rs. 10,000 for the two inputs, and that the prices of the two inputs as Rs. 1000 per unit of capital and Rs. 200 per unit of labor. The firm will have three alternative possibilities before it .
a) To spend the money only on capital and secure 10 units of it .
b) To spend the amount only on labor and secure 50 unit of labor
c) To spend the amount partly on capital and partly on labor .
The factor price line is also known as isocost line because it represents various combinations of inputs that may be purchased for the given amount of money allocated . The slope of the factor price line shows the price ratio of capital and labor i.e.. 1:5.
By combining the isoquant and the factor price line , one can find out the optimum combination of factors which will maximize output .
Equal product curves IQ1 , IQ2 , and IQ3 represents output of 1000 units , 2000 units and 3000 units respectively . AB is the factor price line . At point E the factor-price line is tangent to isoquant IQ2 representing 2000 units of output . Point E indicates the maxi- -mum amount of capital and labor which the firm can combine to produce 2000 units of output . The isoquant IQ3 falls outside the factor price line AB and therefore cannot be chosen by the firm . On the other hand , Isoquant IQ1 will not be preferred by the firm even though between R and S it falls within the factor price line .Points R and S are not suitable because output can be increased without increasing additional cost by the selection of a more appropriate input combination . Point E , therefore ,is the ideal combination which maximizes output or minimizes cost per unit , it is the point at which the firm is in equilibrium .
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Is use of least-cost input combination a necessary condition for profit maximization is it a sufficient condition explain?
1. Minimization of Cost for a Given Level of Output: Least Cost Conditions
The amount of money that a firm pays to buy inputs is called?
Total cost
Perfectly competitive firm in long run equilibrium?
what about them? profits are 0 price=marginal cost all costs are variable optimal allocation of inputs is where marginal rate of technical substitution is equal to the price ratio of the inputs.
What is levelized tariff?
A levelized tariff is estimated for recovery of all cost inputs( CPP and EPP) including cost of equity over the agreement /project life. It if computed by amortizing the financial cost over the project life and with addition of O&M cost.
What are Inputs that can be increased or decreased in the short run called?
variable inputs. On the other hand fixed inputs are long run.
What is isocost?
isocost is really aline that demonstrates the combination of inputs that can be used however each combination has the same cost
What is iso cost line?
the combination of two different inputs which costs the same amount..
What is the optimal combination of inputs and its formula?
optimum combination of input
What is the meaning of cost of inputs?
its when you have it with someone hhahhahhaha
Is use of least-cost input combination a necessary condition for profit maximization is it a sufficient condition explain?
1. Minimization of Cost for a Given Level of Output: Least Cost Conditions
Does all inputs need to be used in order for HDMI switcher to work?
No. At least two inputs are the mimimum that makes a switcher viable, but unused inputs can always be left disconnected.
The amount of money that a firm pays to buy inputs is called?
Total cost
Difference between Nor and Nand gate flip flops?
NAND is Not AND, meaning that if both inputs are true, the output is false.Any other combination (Including 0 0) does not change the output and it remains true. It's the opposite of AND, in which both inputs must be true for the output to be true.NOR is Not OR. If at least one input is true, the output will be false.It's the opposite of OR, where the output is true if at least one input is true.The main difference is that NOR requires at least oneinput being true to make the output false, where NAND requires both to be true.
What is the difference between implicit and explicit theory?
explicit is the market value of all inputs purchased by a producer while implicit cost is the market value of inputs owned by the producer himself.
Productivity is the ratio of and .?
Total factor productivity is the ratio of total value added and the total cost of inputs.
What is least cost site?
a least cost site is a business location that allows businesses to minimize its cost.
What is economical profit?
Difference between revenue received from sale of an output & the opportunity cost of inputs used. (EVA)
