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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So, higher the isoquant curve, greater will be the production level.
Iso-Quant Curve: Definitions, Assumptions and Properties
These lines or rays show that both labour and capital are increased to expand output. It means that the marginal rate of technical substitution is diminishing.
This is used to identify particular browsers or devices when the access the service, and is used for security reasons. In other words, units increase in output can be obtained by employing equal increment of labour.
Money, Real and Opportunity Costs.
What are the properties of Iso-quant Curve? Business Jargons
At propertiess point, the slope of the iso-cost line is equal to the iso-product curve. This can be understood with the aid of the isoquant schedule, in Table 2. Point K on the Y-axis implies that the commodity can be produced with OK units of capital and without any unit of labor.
Slope of an iso-quant curve is influenced iosquant the technical possibility of substitution between factors of production.
It simply tells that the combinations on a given indifference curve yield more satisfaction than the combination on a lower indifference curve of production. An isoquant map is a set of isoquants that shows the maximum attainable output from any given combination inputs. These curves are also known as outlay isoqaunt, price lines, input-price lines, factor-cost lines, constant-outlay lines, etc.
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 isoqiant of an isoquant depends upon the marginal rate of technical substitution.
The iso-costs are straight lines because factor prices remain the same whatever the outlay of the firm on the two factors. A given quantity of output may be produced with different combinations of factors.
Isoquants: Meaning, Assumptions and Properties – Businesstopia
Greater combination of labor and capital makes large scale of production. The downward sloping iso-product curve can be explained with the help of the following isoquang Let us suppose that EF is 20 units of labour and FG is 10 units of labour. Like indifference curves, issoquant are convex to the origin. 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 isoquant curve has almost the same properties as are possessed by the indifference curve of propefties theory of consumer behavior.
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 isoquant slopes downwards from left to right.
As we move along these lines the amount of one input varies while of the other remains constant. So we can say that production level at Iq 2 is higher than the production level at Iq 1. While using ON 3 amount of land, at point C, if more than OL 3 units of labour are used, total output will be less than 60 quintals of wheat.
Properties of Iso-quant curve
Moreover, since the lines OA, OB and OC are straight lines passing through the origin, the ratio between labour and capital remains same along each one of these lines.
Google provides ad serving technology and runs an ad network. When the input units of labor was increased to OL 2the input units of capital was reduced to OK 2. In figure 4, the isoquant IQ 1 shows units of output produced by various combinations of labor and capital and the curve IQ 2 shows units of output. Firstly, in the indifference curve technique, utility cannot be measured.
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. In Figure 10, oval shaped isoquants are shown. It occurs when additional application of the variable factor i. Thus it means equal quantity or equal product. Very nice and detailed explanation and simple illustrations to understand easily The same argument can be made to rule out combination T or any other combination lying on a portion of the isoquant where the slope is positive.
It can also be defined as the slope of an isoquant. OR3 units of labour are the minimum osoquant to produce this level of output.