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. The term ‘isoquant’ is composed of two terms ‘iso’ and ‘quant’. Iso is a Greek word which means equal and quant is a Latin word which means. Property 2: An isoquant curve, because of the MRTS effect, is convex to its origin. This indicates that factors of production may be substituted.
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In the figure, MRTS between any two points is given by the slope between those points. It can also be defined as the slope of an isoquant. It is also called Scale-line. In Figure 10, oval shaped isoquants are shown. We partner with Say Media propertis deliver ad campaigns on our sites. These factors may be substituted for one another. This is used to display charts and graphs on articles and the author center.
An isoquant lying above and to propertise right of isoquan isoquant represents a higher level of output. It simply tells that the combinations on a given indifference curve yield more satisfaction than the combination on a lower indifference curve of production. The importance of ridge lines is explained with the help of Figure The initial iso-cost line of the firm is AB.
Supposing the cost per unit of labour and capital remains unchanged and the financial resources of the firm increase. Iaoquant A indicates 5 units of capital and no unit of labour, while point D represents 10 units of labour and no unit of capital. It will be called the price-factor curve. Then the output must increase. When capital is taken constant at OR and production is expanded by adding more labour, the distance between successive Isoquants becomes increasingly greater, that is even more and more labour is needed for every additional units of output.
The dotted segments of an isoquant are the waste- bearing segments. An isoquant is a curve propegties shows all the combinations of inputs that yield the same level of output.
Isoquant – Meaning and Properties | ToughNickel
It shows how the propertiez of the two factors used might be changed as the firm expands. In order to understand this fact, we have to understand the concept of diminishing marginal rate of technical substitution MRTSbecause convexity of an isoquant implies that the MRTS diminishes along the isoquant. We see here that the distance between successive isoquant curves is decreasing, that is, less and less labour is needed for every additional units of output.
The conclusion is that the isoquant cannot be a vertical straight line.
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. An Iso-product map shows a set of iso-product curves. Likewise, point C represents 4 units of labour and 3 units of capital.
Properties of Iso-quant curve
This means diminishing marginal product of labour. The lines joining these points are called ridge lines.
By joining together equilibrium points E, E 1 and E 2one gets a line called scale-line or Expansion Path. MRTS is the loss of certain units of capital which will just be compensated for by additional units of labour at that point.
Isoquant – Meaning and Properties Updated on June 10, Which of the optimum combinations of factors will be used by the firm is known as Expansion Path. Each iso-cost curve represents the different combinations of two inputs propertiss a firm propertties buy for a given sum of money at the given price of each input. Like, indifference curves, Iso- quant curves also slope downward from left to right. Since it is an extension of Indifference curve proprties from the theory of consumption to the theory of production.
An iso-product curve, on the other hand, represents a particular level of output. Very good, language is cLear n understandable The isoquant curves can be parallel only when the MRTS of both the curves are equal.
The shape of an isoquant depends upon the marginal rate of technical substitution. It is called output path. Curves OA and OB are the ridge lines and in between them only feasible units of capital and labour can be employed to produce, and units of the product. Comparing combination A with B, we see that 4 units of capital is replaced by 1 unit of labor, without altering the output.
Unless you are signed in to a HubPages account, all personally identifiable information is anonymized. The above table is based on the assumption that only two factors of production, namely, Labor and Capital propertifs used for producing meters of cloth.