Comparing combination A with B, we see that 4 units of capital is replaced by 1 unit of labor, without altering the output. Therefore, is the marginal rate of technical substitution in this case. In the figure, MRTS between any two points is given by the slope between those points. In the same way, MRTS at any particular point on the isoquant curve can be calculated by finding the slope of the line that is tangent to that point on the curve. Properties of Isoquant Curve The isoquant curve has almost the same properties as are possessed by the indifference curve of the theory of consumer behavior.
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Comparing combination A with B, we see that 4 units of capital is replaced by 1 unit of labor, without altering the output. Therefore, is the marginal rate of technical substitution in this case. In the figure, MRTS between any two points is given by the slope between those points. In the same way, MRTS at any particular point on the isoquant curve can be calculated by finding the slope of the line that is tangent to that point on the curve.
Properties of Isoquant Curve The isoquant curve has almost the same properties as are possessed by the indifference curve of the theory of consumer behavior. They are explained below. Isoquant is convex to the origin The isoquant is convex to the origin because the marginal rate of technical substitution MRTS between the inputs is diminishing. As shown in the tabular example of MRTS, the ratio by which the input units of capital is substituted by labor units diminishes with more and more substitution of labor for capital.
Thus, the isoquant curve is convex to the origin. If the isoquant curve had been concave to the origin, it would imply that the MRTS increases as more and more of labor is substituted for capital.
And this would be against the assumption that the isoquant curve is based on. Isoquant is negatively sloped The isoquant curve is neither upward sloping nor horizontal but always slopes downward from left to right.
It is because the producer will have to give up some of the input units of capital to increase the input of labor when keeping the production amount unchanged. Increasing input units of either of the factors without deducing the input of the other factor will result in increased production and it is beyond the principle of isoquant curve. In the figure, when OK1 units of capital were employed, OL1 units of labor were employed too.
When the input units of labor was increased to OL2, the input units of capital was reduced to OK2. Therefore, the curve is downward sloping from to right. And slope of any downward sloping curve is always negative.
Higher isoquant represents higher production The isoquant which is in higher stage has higher units of labor and capital combinations. Greater combination of labor and capital makes large scale of production.
So, higher the isoquant curve, greater will be the production level. In the figure, we can see that there are two isoquant curves Iq1 and Iq2. We can also see that the combination A lies on Iq1 and combination B lies on Iq2. So we can say that production level at Iq2 is higher than the production level at Iq1.
Two isoquants never intersect each other Each isoquant curve is a representation of particular level of production. The level of production or output of a production process is same throughout the curve. In the above figure, Iq1 and Iq2 are two isoquant curves and R is the point where both the curves intersect.
Yet, two isoquant curves need not be parallel to each other. The parallelism of isoquant curves depend upon the MRTS. The isoquant curves can be parallel only when the MRTS of both the curves are equal. What are other people reading?
Properties of Iso-quant curve
By Will Kenton Updated Sep 10, The isoquant curve is a graph, used in the study of microeconomics , that charts all inputs that produce a specified level of output. This graph is used as a metric for the influence that the inputs have on the level of output or production that can be obtained. The isoquant curve assists firms in making adjustments to inputs to maximize outputs, and thus profits. Essentially, the curve represents a consistent amount of output. The isoquant is known, alternatively, as an equal product curve or a production indifference curve.
Thus, an isoquant schedule is a schedule of different combinations of factors of production yielding the same quantity of output. An iso-product curve is the graphic representation of an iso-product schedule. Thus, an isoquant is a curve showing all combinations of labor and capital that can be used to produce a given quantity of output. Isoquant Map An isoquant map is a set of isoquants that shows the maximum attainable output from any given combination inputs.
Isoquants: Meaning, Assumptions and Properties
Thus it means equal quantity or equal product. Different factors are needed to produce a good. These factors may be substituted for one another. Iso-quant curves are also known as Equal-product or Iso-product or Production Indifference curves. Since it is an extension of Indifference curve analysis from the theory of consumption to the theory of production. Thus, an Iso-product or Iso-quant curve is that curve which shows the different combinations of two factors yielding the same total product. Like, indifference curves, Iso- quant curves also slope downward from left to right.
Iso-Quant Curve: Definitions, Assumptions and Properties