Production 2

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Production 2

  1. 1. PROPERTIES OF ISOQUANTS <ul><li>Isoquants Slope Downwards from Lefts to Right: </li></ul>A B F D O X Y Y 2 Y 1 X 1 X 2
  2. 2. <ul><li>Isoquants never cut, Touch or Intersect Each Other: </li></ul>Y O Y Y C X O O X X A A A B B B C C FIGURE-1 FIGURE-2 FIGURE-3
  3. 3. Isoquants are covex to the Origin
  4. 4. 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
  5. 5. 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>
  6. 6. 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
  7. 7. 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
  8. 8. 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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