Answer to Question #132319 in Microeconomics for zain

Question

Appreciate the isocost-isoquant analysis. What do you mean by producer’s equilibrium with motive of Profit maximization using the least cost method of production

Answer 1

Isocost and isoquant can show the optimal combination of factors of production to obtain the maximum volume of production at minimum cost. To determine the balance of the manufacturer, you need to combine the isoquant card with isocost. And the isoquant, relative to which the isocost will occupy the tangent position, will determine the largest volume of production according to budgetary possibilities. The point of contact of the isoquant and isocost will be the point of the most rational behavior of the manufacturer, or the point of its equilibrium.