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In Economics, an Expansion Path (Also Called a Scale Line) Is a Line Connecting Optimal Input Combinations as the Scale of Production Expands Essay

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Below is an essay on "In Economics, an Expansion Path (Also Called a Scale Line) Is a Line Connecting Optimal Input Combinations as the Scale of Production Expands" from Anti Essays, your source for research papers, essays, and term paper examples.

In economics, an expansion path (also called a scale line) is a line connecting optimal input combinations as the scale of production expands.   A producer seeking to produce the most units of a product in the cheapest possible way attempts to increase production along the expansion path.
James Jimenez stated “an expansion path gives the most efficient input combinations for every level of output. It is the curve or locus of points that shows the cost-minimizing input combination for each level of output with the input/price ratio held constant. It also shows how input usage changes as output changes. An expansion path is derived for a specific set of input prices.”   Remember Managers are always looking to improve profitability of a product or service, for the least amount of cost.   The issue or dilemma I see is that managers are looking at producing a product or providing a service for the least amount of cost and may not look at the ramifications of using cheaper methods to improve profitability.   A good example of this is many companies are outsourcing inbound call centre services as it’s cheaper to but the quality of service that is being provided to the customer is what gets sacrificed.
Economists Alfred Stonier and Douglas Hague defined expansion path as "that line which reflects least cost method of producing different levels of output, when factor prices remain constant."   The points on an expansion path occur where budget level and the purchaser's indifference curve are tangents. As a producer's budget level increases, each of these points can be connected in a line joining tangency points of isoquants and isocosts (with input prices held constant).   If an expansion path forms a straight line, the production technology is considered homothetic (or homoethetic). In this case, the ratio is always the same, and the inputs can be adjusted based on this ratio for any budget. A Cobb–Douglas production function has an expansion path which is a straight line...

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"In Economics, an Expansion Path (Also Called a Scale Line) Is a Line Connecting Optimal Input Combinations as the Scale of Production Expands". Anti Essays. 13 Dec. 2018

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In Economics, an Expansion Path (Also Called a Scale Line) Is a Line Connecting Optimal Input Combinations as the Scale of Production Expands. Anti Essays. Retrieved December 13, 2018, from the World Wide Web: http://parimatchstavki7.com/free-essays/In-Economics-An-Expansion-Path-Also-508312.html