Optimum combination of resources, Managerial Economics

Optimum combination of resources

The firm can maximise output given costs.  That is when the entrepreneur attains the highest isoquant given a particular Isocost.

1460_optimum combination of resources.png

At the point of tangency the absolute slope of Isoquant will be equal to the slope of the Isocost.  Two conditions should however prevail, namely:

i.   The necessary condition is that

                        w/r  = MPL/MPk                    or       MPL/PL   =    MPk/Pk

ii. The sufficient condition is that the Isoquant must be convex to the Isocost point of Tangency.


1653_optimum combination of resources1.png

Posted Date: 11/28/2012 4:53:02 AM | Location : United States

Related Discussions:- Optimum combination of resources, Assignment Help, Ask Question on Optimum combination of resources, Get Answer, Expert's Help, Optimum combination of resources Discussions

Write discussion on Optimum combination of resources
Your posts are moderated
Related Questions
Northern Lumber operates a large lumber-processing mill in a small town in Washington State.  It is one of the larger lumber producers in the region and has some market power in th

Consider the following table. It shows the market shares of seven clothing stores (A to G) in five dissimilar cities. a) Calculate the Herfindahl index (?H) for each city.

Effects of Fluctuations in Exchange Rates When a country's currency depreciates, exporting firms may have competitive advantage but businesses which rely on imports for raw ma

what are the four factors that lead to diseconomies of scale.

Arc Elasticity Is the average elasticity between two given points on the curve, i.e. Because of the negative relationship between price and quantity demanded, pr

Macro-economic policy objectives The major macro-economic policy objectives which the governments strive to achieve are: i. Full employment One of the main objectives

Profit as rent of ability: one of the most widely known theories of profit was propounded by F.A. Walker. According to him profit is the rent of is the difference between the earn

Why does the demand curve slope downwards? As Figure above demonstrates, demand curve slopes downward to the right. Downward slope of the demand curve reads the law of demand i

Q. Explain about Managerial Economies? Large scale production makes possible the division of managerial functions. So there exists a production manager, a finance manager, asal