Definition/PRINCIPAL :

A rational firm would combine the various factors of

production its production function in such a way that
with the minimum input and maximum output is
obtained at the lowest possible cost.
Such a combination is referred to as the least cost
combination and is also called Optimum factor
combination.
Assumptions of least cost combination

 Two factors of production are: Capital and labor.

 All units of capital and labor are homogeneous.
 The price of factors of production are given and constant.
 Money outlay at any time is also given.
 Perfect competition is prevailing in the factor market.