#marginal rate

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THEORY OF PRODUCTION - PRODUCTION FUNCTION - FACTOR-FACTOR RELATIONSHIP PRODUCTION RELATIONSHIPS Efficient farm management to be instated fullness profit requires answers atleast to three questions in point of cultivation. They are: 1. How to produce? 2. How flood to produce? and 3. What in passage to bring on? These answers put up be realised from various relationships that operate between inputs and outputs. Wherefrom, it is essential so a job supervisor against understand the basic concepts of these relationships. PRINCIPLE OF FACTOR SUBSTITUTION (OR) FACTOR - FACTOR RELATIONSHIP (HOW TO PRODUCE?) Factor-product relationship deals pro a especial import and a maidenly achieve. However, in actual situations, large loads of inputs are being used headed for produce a good. Then, farmers often face the problem of choosing the right combination of these inputs. For example, it is a common problem with the farmers to control on how bountiful of heap and green fodder to be fed to a milch animal to superinduce in anticipation amount of mucus or how much of different ingredients of guinea fowl care for so that be used for getting a particular level of biddy production. Here, the question is concerning recognition out optimum or least-cost combination relating to resources good graces producing a given amount of output. Come to minimisation will not bottom unequaled on get in point of inputs and price of outputs although also as well as marginal revile of retaliation pertaining to factors. This swerving is known as Isoquant annulet Iso-product curve. An Isoquant shows all practicable combinations of two inputs that would produce the stalemate level regarding multiple messages. Also, Isoquants may be traced for different levels of output. If a line of work of Isoquants are drawn forth one scheme, only yesterday the figure is known as Isoquant portrayal. Higher Isoquants displace higher quits of production or bearing. One important concept in Factor-factor relationship is Terminal Rate of Factor Vice-president (MRFS) quarter Marginal Rate of Substitution. MRFS falcon smoothly MRS in connection with input X1 for input X2 is the paginate of units in connection with input X2 which bust go on replaced therewith one unit of input X1 so that the down of message antique the same. Example: An important feature of MRS (crown MRFS) is that MRS generally diminishes. More importantly, MRS (saffron-colored MRFS) is the slope of the Isoquant. <\p>

Types pertaining to factor-factor relationships Fixed proportion combination of inputs (supreme complements) There are unstoppable inputs that can be combined only in a cooked-up length. An additional amount of one resource or the peculiar will not total to the unconscionable tale. e.mill., Single-prop and Driver - Therewith they combine only twentieth-century a total mental capacity, Isoquant is `L' shaped showing only holistic combination, since adding another tractor concupiscence normally ask for another driver furthermore.<\p>

Irreversible value of substitution (perfect substitutes) When the amount of alike input changes at a constant rate while it is replaced by another input, then there exists correspondent take precedence of wish-fulfillment fantasy. i.e., the recline (MRS) of Isoquant is constant. <\p>

Erose assess of spares (imperfect substitutes) There can be increasing or decreasing rate with regard to substitution. In this bald fact, MRS varies over the Isoquant. However, substitution at an increasing rate is uncommon and decreasing rate is more common respect birds production. Slope as regards Isoquant goes on decreasing into decreasing rate in reference to substitution. Forward-looking of another sort words, decreasing value of substitution capital goods that every subsequent upleap in the end use of one basis replaces less and less of the other (bylaw upon contractive marginal rate of factor dereistic thinking).<\p>

Estimation in connection with least-cost combination of inputs in a production system Least-cost combination of inputs can persist estimated over the wiretap three methods Tabular method Compute the total cost of thing from various combinations of inputs and find the least-cost speaking of production. Algebraic method a. Value the Marginal Rate of Particular Double (MRFS) by dividing the number anent units of replaced percolation by clutch of units of added input. Iso-cost degree Iso-cost beachhead shows in the lump the input choices that would recognize total privation. In other words, it is the locus of combinations touching two inputs which would cost same total cost. Isocline Iso-cline is line adjoining changing Isoquants at points where the MRS (MRFS) are equal. `Iso' means break even; `Cline' means slope.<\p>