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 are types of isoquant curves?
Kinked iso-quant curve is also known as activity analysis programming iso-quant or linear programming iso-quant. Convex Iso-quant Curve: In this types of iso-quant curves, the factors can be substituted for each other but up to a certain extent.
What is an isoquant curve and isoquant line?
Isoquant is also called as equal product curve or production indifference curve or constant product curve. Isoquant indicates various combinations of two factors of production which give the same level of output per unit of time.
What is slope of isoquant?
The slope of the isoquant is defined as the marginal rate of substitution. Isoquants with varying shapes and slopes are illustrated. The shape of an isoquant is closely linked to the characteristics of the production function that transforms the two inputs into the output.
What are the 3 types of isoquants?
They are,
- Linear isoquant.
- Input-output isoquant.
- Kinked isoquant.
- Smooth, convex isoquant.
What are the assumptions of isoquant curve?
Assumptions of Isoquant Curve Only two inputs (labor and capital) are employed to produce a good. There is technical possibility of substituting one input for another. It implies that the production function is of variable proportion type. Labor and capital are divisible.
Which is an L shaped isoquant?
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 the shape of isoquant?
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.
What is L shaped isoquant?
Why is isoquant curve convex to Origin?
Isoquants are convex to the origin This is because of the operation of the principle of diminishing marginal rate of technical substitution. MRTS is the rate at which marginal unit of an input can be substituted for another input making the level of output remain the same.
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 are the importance of isoquants?
iii) Isoquants Are Convex to the Origin: But if it is specified that Marginal Rate of Technical Substitution (MRTS) is diminishing for a curve, it automatically implies that the curve is convex to the origin. Here ∆K indicates small change in capital and ∆L indicates small change in labour.
Why isoquant curve is convex?
An isoquant must always be convex to the origin. This is because of the operation of the principle of diminishing marginal rate of technical substitution. MRTS is the rate at which marginal unit of an input can be substituted for another input making the level of output remain the same.
Why is isoquant oval shaped?
7. Each Isoquant is Oval-Shaped. It means that at some point it begins to recede from each axis. This shape is a consequence of the fact that if a producer uses more of capital or more of labour or more of both than is necessary, the total product will eventually decline.
Why isoquants are downward sloping?
Why is the isoquant oval?
Why is isoquant curve convex?
Property 2: An isoquant curve, because of the MRTS effect, is convex to its origin. This indicates that factors of production may be substituted with one another. The increase in one factor, however, must still be used in conjunction with the decrease of another input factor.
What is ridge line in isoquant?
The ridge lines are the locus of points of isoquants where the marginal products (MP) of factors are zero. The upper ridge line implies zero MP of capital and the lower ridge line implies zero MP of labour. Production techniques are only efficient inside the ridge lines.
Why isoquant curve is downward sloping?
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. This property falls in line with the principle of the Marginal Rate of Technical Substitution (MRTS).
What is an isoquant curve and how does it work?
Linear Isoquant. It is quite an unrealistic approach where one factor completely substitutes the other in the production process.
What is isoquant and briefly explain the types of isoquant?
Types of Isoquant Curve. There is a continuous substitution of one input variable by the other input variable at a diminishing rate. Perfect complements and perfect substitutes give different forms of isoquants. The different types of isoquant curve are as follows: Linear isoquant; L-shaped isoquant
What is the difference between an isocost and an isoquant?
Smooth and Convex Isoquant: In a two-product framework,when one of the factors of production can be continuously substituted by the other,we get a smooth and convex isoquant (figure
What does isoquant mean?
The isoquant is known, alternatively, as an equal product curve or a production indifference curve.The term “isoquant,” broken down in Latin, means “equal quantity,” with “iso” meaning equal and “quant” meaning quantity.