Post on 15-Nov-2014
description
BY:ATHMIKA RAO
FATHIMA SABIRAALTHAF HUSSAIN
ISOQUANT
S
ISOQUANT
Isoquant derived from Italian word
iso= equal quant= product
Geometric representation of production
funtion
Isoquant indicates various combinations
of two factors of production which give
the same level of output per unit of time.
Fixed inputs – constant in nature
ex: land, building, asset etc
Variable inputs – vary with the
environment
ex: raw material, capital and
labour
iso-quant represents 2 variable inputs
capital(k) and labour (L)
Isoquant Indifference curve
Producer goods
Output
Combination of inputs
Consumer goods
Satisfaction
Combination of commodities
MARGINAL RATE OF TECHNICAL SUBSTITUTION
the rate at which a firm must
substitute one input for another in
order to keep production at a given
level
the rate at which capital can be
exchanged for 1 more (or less) unit of
labor
MPK = the marginal product of K
MPL = the marginal product of L
Q= MPK K + MPL L
Q= 0 along a given isosquant
MPK K + MPL L = 0
MRTS= K/ L
PROPERTIES OF AN ISOQUANT
TYPES OF ISOQUANT
Linear isoquant
Leontief isoquant
THANK YOU