ISOCOST & LEAST COST COMBINATION-CS.FINAL YEAR

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ISOCOST & LEAST COST COMBINATION-CS.FINAL YEAR B.E.,

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ISOCOST & LEAST COST COMBINATION-CS.FINAL YEAR

  1. 1. Dr.K.Baranidharan Present by…
  2. 2. Engineering Economics & Financial Accounting ISOCOST LEAST COST COMBINATION 231 July 2013
  3. 3. INDEX •ISOCOSTS •LEAST-COST COMBINATION OF INPUTS
  4. 4. 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
  5. 5. The total cost as represented by each cost curve, is calculated by multiplying the quantity of each input factor with its respective price. The 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. c a p i t a l Labour I C = 1 . 0 I C = 1 . 5 I C = 2 . 0
  6. 6. 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
  7. 7.  The slope of an isoquant is equal to that of an isocost is the place of the point of cost of production.
  8. 8. Dr.K.Baranidharan Thank you K YOU
  9. 9. THANK YOU!!

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