ECONOMIC REGION OF PRODUCTION Y A 1 A 2 A 3 A 4 B 1 B 2 B 3 B 4 IQ 1 IQ 2 IQ 3 IQ 4 X O LABOUR CAPITAL
OPTIMUM COMBINATION OF FACTORS <ul><li>A profit maximizing producer aim to minimize his cost for producing a given output or maximize the output, given the total cost, this aim can achieved by securing the optimal combination of factors, the ultimate choice depends upon, </li></ul><ul><ul><li>Technical possibilities of production, and </li></ul></ul><ul><ul><li>The price of factors used for the production of a particular product . </li></ul></ul>
ISO-COST LINE Rs. 200 Rs. 300 Rs. 400 80 60 10 20 30 40 40 20 O Y X B D F A C E
PRODUCER’S EQUIBRIUM Capital O Y X O Y X Labour E 1 C D F H E IQ 2 U T G R P Q IQ E 2 IQ 3 IQ 1 A B Capital Labour Figure-1 Figure-2
EXPANSION PATH G E B A F H C D O Y X Expansion Path E 1 E 2 E 3 E 4
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