Isoquants - Production
An isoquant (isoproduct) is a curve on which the various combinations of labour and capital show the same output. According to Cohen and Cyert, “An iso-product curve is a curve along which the maximum achievable rate of production is constant.” It is also known as a production indifference curve or a constant product curve.
Just as indifference curve shows the various combinations of any two commodities that give the consumer the same amount of satisfaction (iso-utility), similarly an isoquant indicates the various combinations of two factors of production which give the producer the same level of output per unit of time.
Table 24.1 shows a hypothetical isoquant schedule of a firm producing 100 units of a good.
This Table 24.1 is illustrated on Figure 24.1 where labour units are measured along the X-axis and capital units on the K-axis. The first, second, third and the fourth combinations are shown as A, S, С and D respectively. Connect all these points and we have a curve IQ.
This is an isoquant. The firm can produce 100 units of output at point A on this curve by having a combination of 9 units of capital and 5 units of labour.
Similarly, point В shows a combination of 6 units of capital and 10 units of labour; point C,4 units of capital and’ 15 units of labour; and point D, a combination of 3 units of capital and 20 units of labour to yield the same output of 100 units.
An isoquant map shows a number of isoquants representing different amounts of output.
In Figure 24.1, curves IQ, IQ1 and IQ2 show an isoquant map. Starting from the curve IQ which yields 100 units of product, the curve IQ1, shows 200 units and the IQ2 curve 300 units of the product which can be produced with altogether different combinations of the two factors.
Powered By 360Presence
Project Time Cost Trade-off Project Time Cost Trade-off Project Time Cost Trade-off Project Time Cost Trade-off