ISOQUANT
An isoquant is the firm's matching
part of the consumer's indifference curve. It is the collection of inputs in
the form of factors of production labor (L) and capital (K), which yield the
same output. For a definite output level the equation of the production
function becomes
Q0 = f (L, K)
Where, Q0
is a parameter.
The locus of all the combinations of
L and K, which satisfy the above equation, forms an isoquant. Since the
production function is continuous, an indefinite number of input combinations
will lie on each and every isoquant. The two factors of production are
substitutable and we can employ more of one factor and less of another factor
to get the same level of output. A higher level of output is represented by a
higher isoquant. If we assume that the marginal productivities of both the
factors of production are positive and decreasing as more of them are used, the
isoquant will be downward sloping and convex to the origin.
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Box Isoquant
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A isoquant
is a curve showing all combinations of inputs that can be used to produce a
given output. The table shows five methods of production with various input
combinations. When we plot on a graph, we get an Isoquant. Marginal Rate of
Technical Substitution ((MRTSLK) measures the rate at which labor can be
substituted for capital, output being constant. This is nothing but the slope
of the Isoquant at any point.
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