What is the isoquant curve?
An isoquant curve is a concave line plotted on a graph, showing all of the various combinations of two inputs that result in the same amount of output. Most typically, an isoquant shows combinations of capital and labor and the technological trade-off between the two.
How do you find the slope of an isoquant curve?
Rearranging terms we obtain an equation for the slope of an isoquant: dL/dK = – MPl /MPk . Note that as we move from left to right along an isoquant we increase the amount of labor while decreasing the amount of capital.
What is isoquant curve explain its properties?
An isoquant is a firm’s counterpart of the consumer’s indifference curve. An isoquant is a curve that shows all the combinations of inputs that yield the same level of output. ‘Iso’ means equal and ‘quant’ means quantity. Therefore, an isoquant represents a constant quantity of output.
What is right angle isoquant?
Right Angle Iso-quant Curve: This is one of the types of iso-quant curves, where there is a strict complementarity with no substitution between the factors of production. According to this, there is only one method of production to produce any one commodity.
What are Isocost and isoquant curves?
Isocost curve is a producer’s budget line while isoquant is his indifference curve. Definition. Isoquant is also called as equal product curve or production indifference curve or constant product curve.
What is an isoquant what determines the shape of an isoquant How is it possible to substitute capital for labor and vice versa if each machine has an operator?
Isoquants are curves that represent efficient blend of different inputs such as labor and capital which yield the same (iso) level of output (quantity). Isoquants are usually downward sloping convex curves whose shape depend on the degree of substitution between different inputs.
Why is isoquant downward sloping?
The isoquants slope downward because both labour and capital have positive marginal products. More of either input increases output; so if output is to be kept constant as more of one input is used, less of other input must be used.
What is isoquants and its types?
An isoquant is a curve showing all possible combinations of inputs physically capable of producing a given level of output. Ferguson. An isoquant curve may be defined as a curve showing the possible combinations of two variable factors that can be used to produce the same total product.
What is the slope of Isoproduct curve?
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. The slope of an Iso-quant curve expresses the marginal rate of technical substitution (MRTS).
What does an L-shaped isoquant mean?
perfect complements
The curvature of an isoquant shows how readily factor inputs can be substituted: if inputs are perfect substitutes the isoquant is a straight line; if inputs are perfect complements the isoquant is L-shaped. The isoquant becomes less straight as the inputs become poorer substitutes.
What is an ISO-Quant curve?
Iso-Quant Curve: Definitions, Assumptions and Properties! The term Iso-quant or Iso-product is composed of two words, Iso = equal, quant = quantity or product = output. Thus it means equal quantity or equal product.
What is the difference between isoquant and isoproduct?
An isoquant is a curve on which the various combinations of labour and capital show the same output. An isoproduct curve is a curve along which the maximum achievable rate of production is constant. It is also known as a production indifference curve or a constant product curve.
How do you calculate isoquant?
To calculate an isoquant, you use the formula for the marginal rate of technical substitution (MRTS): For example, in the graph of an isoquant where capital (represented with K on its Y-axis and labor (represented with L) on its X-axis, the slope of the isoquant, or the MRTS at any one point, is calculated as dL/dK.
When was the isoquant graph used?
Whatever its origins, by the late 1930s, the isoquant graph was in widespread use by industrialists and industrial economists. 1 Property 1: An isoquant curve slopes downward, or is negatively sloped. This means that the same level of production only occurs when increasing units of input are offset with lesser units of another input factor.