Least-cost combination of resources

Definition

The least-cost combination of resources refers to the optimal allocation of inputs or factors of production in order to produce a given level of output at minimum cost. It involves minimizing the expenses associated with labor, capital, and other resources while maintaining the desired level of production.

Related terms

Marginal cost: The additional cost incurred by producing one more unit of output.

Production function: A relationship between inputs (resources) and outputs (products) that shows how much output can be produced from different combinations of inputs.

Factor substitution: When one input is replaced by another input in the production process in order to minimize costs.