ISOCOST & LEAST COST COMBINATION-CS.FINAL YEAR
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Dr.K.Baranidharan Present by…
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ISOCOST & LEAST COST COMBINATION-CS.FINAL YEAR B.E.,
Transcript of ISOCOST & LEAST COST COMBINATION-CS.FINAL YEAR
Dr.K.Baranidharan
Present by…
Engineering Economics &
Financial Accounting
ISOCOSTLEAST COST
COMBINATION2April 12, 2023
INDEX
•ISOCOSTS•LEAST-COST COMBINATION OF INPUTS
ISOCOSTS
Isocosts refer to the cost curve that represents the combination of inputs that will cost a producer the same amount of money.
Isocosts denotes IQ2a particular level of total cost for a given level of production.
The level of production changes, the total cost changes and, thus the isocosts curve moves upwards
The total cost as represented by each cost curve, is calculated by multiplying the quantity of each input factor with its respective price.
Click icon to add pictureThe three download sloping straight line cost curves (assuming that the input prices are fixed, no quantity discount are available) each costing Rs.1.0 lakh, Rs.1.5 lakh and Rs.2.0 lakh for the output leavels of 20,000-30,000 and 40,000 units.
capital
Labour
IC=1.0
IC=1.5
IC=2.0
Least-Cost Combination
A manufacturer has to “produce at a lower cost to attain a higher profit”
Isocosts and isoquants can be used to determine the input usage that minimizes the cost of production
The slope of an isoquant is equal to that of an isocost is the place of the point of cost of production.
Dr.K.BaranidharanThank you
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THANK YOU!!
