Answer to Question #145680 in Economics for Shivani Lohiya

Question

What is meant by optimum combination of inputs? What are the technical conditions of optimal combinations of inputs?

Answer 1

The optimum factors combination or the least cost combination refers to the combination of factors with which a firm can produce a specific quantity of output at the lowest possible cost. There are a number of combinations of factors which can yield a given level of output.

The first order conditions state that the variable factors are combined in an optimal manner when the ratio of marginal products is equal to the ratio of factor prices. This optimal combination is called the least cost combination of inputs.