As a profit maximization strategy, firms should aim to minimize the costs of production through the efficient combination of inputs, and a deeper understanding of how cost varies with production.
Using an example of a health service provider in Saudi Arabia:
- Identify the major inputs used in production;
- Discuss the relationship of inputs to output (service);
- Assess efficiency of resource utilization; and
- Evaluate the cost minimization strategy of the organization. Do you agree with this strategy? Why or why not?
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