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The production function can have many uses. It can be used to compute least-cost factor combination for a given output or maximum output combination for a given cost. Knowledge of production function can be helpful in deciding on the value of using a variable factor in the production process. As long as marginal revenue productivity of a variable factor exceeds its price, it would be profitable to increase its use. When marginal revenue productivity of factor becomes equal to its price the extra employment of the factor must be stopped. Because the production function demonstrates the returns to scale it would help in the decision making. If the returns to scale are diminishing, it's not worthwhile to increase production. Opposite would be true if returns to scale are increasing.
asumption and limitation of increemrntal,oppurtunity cost
Calculate point elasticity of demand for demand function Q=10-2p for decrease in price from Rs 3 to Rs 2
Assignment
Discuss whether Indian Consumer goods industry is growing at the cost of future Profitability.
is Indian companies running a risk by not giving attention to cost cutting?
A firm producing hockey sticks has a production function given by X = 2 KL In the short-run, the firm's amount of capital equipment is fixed at K = 1000. The rental rate fo
Measuring Point Elasticity on a Linear Demand Curve To explain the measurement of point elasticity of a linear demand curve, let's suppose that a linear demand curve is given b
REASONS FOR FLUCTUATIONS IN AGRICULTURAL PRICES Production depends on factors beyond the control of the producers e.g. weather, disease and pests. Actual and planned output i
Determinants of the money supply Two extreme situations are imaginable. In the first situation, the money supply can be determined at exactly the amount decided on by the Cen
Bank Deposit Bank notes and coins together constitute the currency in circulation. But they form only a part of the total money supply. The larger part of the money supply i
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