Properties of Isoquants

Isoquants possess certain properties which are similar to those of indifference curves.

(1) Isoquants are negatively inclined: Isoquant must slope downward to the right.

(2) An Isoquant lying above and to the right of another represents a higher output level. In Figure 24.3 combination В on IQ1 curve shows larger output than point A on the curve IQ.

The combination of ОС of capital and OL of labour yields 100 units of product while OC1 of capital and OL1 of labour produce 200 units.

Therefore, the isoquant IQ1 which lies above and to the right of the isoquant IQ, represents a larger output level.

(3) No two isoquants can intersect each other. The absurd conclusion that follows when two isoquants cut each other is explained with the aid of Figure 24.4. On the isoquant IQ, combination A =B. And on the isoquant IQ1 combination R=S. But combination S is preferred to combination B, being on the higher portion of isoquant IQ1.

On the other hand, combination A is preferred to R, the former being on the higher portion of the isoquant IQ.

To put it algebraically, it means that S> В and R< A. But this is logically absurd because S combination is as productive as R and A combination produces as much as B. Therefore, the same combination cannot both be less and more productive at the same time. Hence two isoquants cannot intersect each other.

(4) Isoquants need not be parallel because the rate of substitution between two factors is not necessarily the same in all the isoquant schedules.

(5) In between two isoquants there can be a number of isoquants showing various levels of output which the combinations of the two factors can yield. In fact, in between the units of output 100, 200, 300, etc. represented on isoquants there can be innumerable isoquants showing 120, 150, 175,235, or any other higher or lower unit.

(6)  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. This is a logical absurdity for OL units of labour alone are incapable of producing anything.

Similarly, ОС units of capital alone cannot produce anything without the use of labour. Therefore IQ and lQ1 cannot be isoquants, as shown in Figure 24.5.

(7) Each isoquant is convex to the origin:

As more units of labour are employed to produce 100 units of the product, lesser and lesser units of capital are used. This is because the marginal rate of substitution between two factors diminishes.

In Figure 24.6, in order to produce 100 units of the product, as the producer moves along the isoquant from combination A to В and to С and D, he gives up smaller and smaller units of capital for additional units of labour.

To maintain the same output of 100 units, BR less of capital and relatively RC more of labour is used.

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By Hassham

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