Estimation of economic values for selection indices

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Abstract
A procedure to estimate economic values for use in selection indices is developed. A profit function is specified and a production function that links output to the several inputs developed. The profit function is maximized by equating the partial derivatives of the function with respect to each input to zero and simultaneously solving the resulting system of first-order equations for optimal levels of the variables. These variables include economic values for animal traits and levels of exogenous, producer-supplied inputs. The economic values are then used in a selection index. The resulting index value is therefore determined by the average values of the traits, the available inputs and their prices, output price and the specified production function. The procedure has the flexibility, through varying these parameters, to provide index solutions that are tailored to suit individual production conditions. A numerical example is provided.