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Isocosts Farther From The Original Christmas

 
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MessagePosté le: Mer 14 Déc - 20:43 (2016)    Sujet du message: Isocosts Farther From The Original Christmas Répondre en citant




Isocosts Farther From The Original Christmas > shorl.com/stajistybajase















































Isocosts Farther From The Original Christmas

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A line joining tangency points of isoquants and isocosts (with input prices held constant) is called the expansion path.[3]. The choice is based on the prices of factors of production at a particular time. Output produced by different combinations of L and K is say, Q, then Q=f (L, K). This page was last modified on 16 April 2012, at 00:07. IQs are convex to the origin: convex isoquants possess continuous substitutability of K and L over a stretch. If both the factors have negative marginal products, the IQ is concave to the origin. This page has been accessed 255,737 times. Let us assume now that there is no change in the market prices of the two factors labor and capita! but the firm increases the total outlay to $150. Least Cost Factor Combination or Producers Equilibrium or Optimal Combination of Inputs The firm can achieve maximum profits by choosing that combination of factors which will cost it the least. The absolute value of the slope of Isoquant is called the Marginal Rate of Technical Substitution.

The chapter examines the theory of production or how firms organize production i.e. The new price line BK shows that with an outlay of $150, the producer can purchase 15 units of capital or 30 units of labor. No two factors are perfect substitutes. Least cost input is a combination where the slope of isoquant is equal to the slope of isocost (a) True (b) False Your score is 0 / 0 Results An isoquant shows the various combination of two inputs that can be used to produce a specific level of output. The isocost line is combined with the isoquant map to determine the optimal production point at any given level of output. The slope depends on the prices of factors of production and the amount of money which the firm spends on the factors. Physical production conditions are given The Scale of operation is variable The state of technology remains constant The shape of Isoquant In this section we examine the characteristics of isoquants, define the economic region of production and consider the special cases where the commodities can only be produced with least cost factor combination. It is a graphical representation of various combinations of inputs say Labour(L) and capital (K) which give an equal level of output per unit of time. Definition Isoquant is also called as equal product curve or production indifference curve or constant product curve. Learning Objectives After reading this chapter, you are expected to learn about: make the students understand the reasons for the existence of firms analyse the production theory with two variable inputs demonstrate the least cost factor combination While going through this analysis students may feel it is a revision of the indifference curve and the budget line.

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