ISOQUANT PROPERTIES PDF

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 other words, the marginal rate of technical substitution of labour for capital is the slope or gradient of the isoquant at a point.

Expansion path means locus of all such points that shows least cost combination of factors corresponding to different levels of output. So, isoqyant the isoquant curve, greater will be the production level. This means an increasing marginal product of labour. They require a larger outlay, which is beyond the financial resources of the firm.

Isoquants: Meaning, Assumptions and Properties – Businesstopia

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Nice information about the topic Thanks sir. The combinations A, B, C and D show the possibility of producing meters of cloth by applying various combinations of labor and capital. The isoquant AH reveals that as the units of labour are successively increased into the factor- combination to produce units of good X, the reduction in the units prkperties capital becomes smaller and smaller.

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Iso-Quant Curve: Definitions, Assumptions and Properties

It means that the isoquant must be convex to the origin at every point. So we can say that production level at Iq 2 is higher than the production level at Iq 1. I’m really satisfied to your explanation. A higher iso-product curve represents a higher level of output as shown in the figure 7 given below: To put it differently, as more units of labour are used, and as certain units of capital are given up, the marginal productivity of labour in relation to capital will decline.

Thus proportion between the two outputs undergoes a change. If keeping OR3 units of labour constant, more than OM3 units of labour are used, the total output will be less than 60 quintals of wheat. Figure 2 is a graphical representation of MRTS.

Isoquants: Meaning, Assumptions and Properties

The isoquant which is in higher stage has higher units of labor and capital combinations. Thanks you very much sir for detailed explanation prooperties diagram. The possibilities of horizontal, vertical, upward sloping curves can be ruled out with the help of the following figure 4: Everytime labour units are increasing by an equal amount AL but the corresponding decrease in the units of capital AK decreases.

It is called output path.

This means diminishing marginal product of labour. This service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles.

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These logical absurdities for OL units of labour alone are unable to produce anything. Since B is having KK 1 more units of capital it is wrong to assume that both A and B will yield the same level of output.

Secondly, in the case of indifference curves, we can talk only about higher or lower levels of utility.

The marginal rate of technical substitution between two factors C capital and L labourMRTS LC is the rate at which L can be substituted for C in the production of good X without changing the quantity of output. Hence, the isoquant cannot be a horizontal straight line like AB. Therefore, the curve is downward sloping from to right. If it is horizontal the quantity of labour increases, although the quantity of capital remains constant.

It depends on marginal rate of technical substitution MRTS whereas slope of an indifference curve depends on marginal rate of substitution MRS between two commodities consumed by the consumer. Thus only an unwise entrepreneur will produce in the dotted region of the iso-quant It can be get very well soon