Isoquant curves aditi sinha

A simple and quick description of ISOQUANT CURVES and its features to help you with your studies.

1. ISOQUANT CURVES

2. — According to  Ferguson ,  "An isoquant is a curve showing all possible combinations of inputs physically capable of producing a given level of output" — In the words of Peterson ,  "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" The term Isoquant or Iso -product is composed of ' iso ' implying equal and 'quant ' implying quantity or product or output. Thus it means equal quantity or equal output. Different factors are needed to produce goods . Isoquant curves are also known as Equal product or Iso -product or Production Indifference Curves .

3. Assumptions: The main assumptions of Iso -quant curves are as follows: 1 . Two Factors of Production : Only two factors are used to produce a commodity . 2 . Divisible Factor : Factors of production can be divided into small parts . 3 . Constant Technique : Technique of production is constant or is known before hand . 4 . Possibility of Technical Substitution : The substitution between the two factors is technically possible. That is, production function is of ‘variable proportion’ type rather than fixed proportion. 5 . Efficient Combinations : Under the given technique, factors of production can be used with maximum efficiency.

4. CHARACTERISTICS   Iso -Product Curves Slope Downward from Left to Ri ght : They slope downward because MTRS of labour for capital diminishes . When we increase labour , we have to decrease capital to produce a given level of output. The Fig . shows that when the amount of labour is increased from OL to OL 1 , the amount of capital has to be decreased from OK to OK 1 , The iso -product curve (IQ) is falling as shown in the figure .

5. Isoquants are Convex to the Origin : Like indifference curves, isoquants are convex to the origin.This is due to dimnishing marginal rate of substitution. Higher Iso -Product Curves Represent Higher Level of Output : This is because of the fact that higher curve will either have more units of one factor or both. units of labour have been taken on OX axis while on OY, units of capital. IQ 1  represents an output level of 100 units whereas IQ2 represents 200 units of output.

6. Isoquants Need Not be Parallel to Each Other: It so happens because the rate of substitution in Different isoquant schedules need not be necessarily equal. therefore ,isoquants may not be parallel as shown in .We may note that the isoquants Iq 1   and Iq 2  are parallel but the Isoquants Iq 3  and Iq4 are not parallel to each other. No Isoquant can Touch Either Axis : If an isoquant touches X-axis, it would mean that the product is being produced with the help of labour alone without using capital at all. These logical absurdities for OL units of labour alone are unable to produce anything.

7. Difference between Indifference Curve and Iso -Quant Curve : The main points of difference between indifference curve and Iso -quant curve are explained below : Iso -quant curve expresses the quantity of output . Each curve refers to given quantity of output while an indifference curve to the quantity of satisfaction. It simply tells that the combinations on a given indifference curve yield more satisfaction than the combination on a lower indifference curve of production. Iso -quant curve represents the combinations of the factors whereas indifference curve represents the combinations of the goods. Iso -quant curve gives information regarding the economic and uneconomic region of production . Indifference curve provides no information regarding the economic and uneconomic region of consumption. Slope of an iso -quant curve is influenced by the technical possibility of substitution between factors of production . 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