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

1. Dr.K.Baranidharan
Present by…

2. Engineering Economics
& Financial Accounting
ISOCOST
LEAST COST
COMBINATION 231 July 2013

3. INDEX
•ISOCOSTS
•LEAST-COST
COMBINATION OF
INPUTS

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. 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. 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.  The slope of an isoquant is equal to that of an
isocost is the place of the point of cost of
production.

8. Dr.K.Baranidharan
Thank you
K YOU

9. THANK YOU!!