Table of Contents
What is the least cost principle?
The principle of least cost combination states that if two factor inputs are considered for a given output the least cost combination will be such where their inverse price ratio is equal to their marginal rate of substitution. via
What is least cost combination?
Thus the least cost combination of factors refers to a firm producing the largest volume of output from a given cost and producing a given level of output with the minimum cost when the factors are combined in an optimum manner. via
What is the profit maximizing rule for hiring workers?
The marginal revenue productivity theory states that a profit maximizing firm will hire workers up to the point where the marginal revenue product is equal to the wage rate. The change in output from hiring one more employee is not limited to that directly attributable to the additional worker. via
What is profit maximization rule?
In economics, the profit maximization rule is represented as MC = MR, where MC stands for marginal costs, and MR stands for marginal revenue. Companies are best able to maximize their profits when marginal costs -- the change in costs caused by making a new item -- are equal to marginal revenues. via
How do you use the lowest cost rule?
The least cost combination is found where the marginal product per dollar for all the resources a firm employs are equal (MPL/PL=MPN/PN=MPC/PC). If the ratios are not equal, a firm would reduce cost by employing more of the resource with a higher MP/P and less of the resource with a lower MP/P. via
How do you do least cost method?
What is the least cost point of a firm?
Since the firm's goal is to maximise profit, the optimum input combination for producing a particular quantity of its product would be one that would produce the output at the minimum possible cost. The optimum input combination in this case is known as the least cost combination of inputs. via
What does W and R mean in economics?
w/r is the wage rate to rental rate (the cost of employing capital as an input) ratio. This measures the relative cost of employing inputs. via
What is ISO cost curve?
An isoquant curve is a concave line plotted on a graph, showing all of the various combinations of two inputs that result in the same amount of output. Most typically, an isoquant shows combinations of capital and labor and the technological trade-off between the two. via
How do you determine how many employees to hire? (video)
Who is hurt by minimum wage?
To some degree, companies, workers, and consumers are hurt by the minimum wage. Companies can be forced to pay more than supply and demand would dictate, and the minimum wage can create higher unemployment because companies will try to make do with fewer workers. via
How do you calculate MRP?
What is the formula of Mr?
The marginal revenue formula is calculated by dividing the change in total revenue by the change in quantity sold. To calculate the change in revenue, we simply subtract the revenue figure before the last unit was sold from the total revenue after the last unit was sold. via