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Home Production Function Properties of Isoquants

Properties of Isoquants:

 

The main properties of the isoquants are similar to those of indifference curves. These properties are now discussed in brief:

 

(i) An Isoquant Slopes Downward from Left to Right:

 

This implies that the Isoquant is a negatively sloped curve. This is because when the quantify of factor K (capital) is increased, the quantity of L (labor) must be reduced so as to keep the same level of output.

 

 

The figure (12.3) depicts that an isoquant IP is negatively sloped curve. This curve shows that as the amount of factor K is increased from one unit to 2 units, the units of factor L are decreased from 20 to 15 only so that output of 100 units remains constant.

 

(ii) An Isoquant that Lies Above and to the Right of Another Represents a Higher Output Level:

 

It means a higher isoquant represents higher level of output.

 

 

The figure 12.4 represents this property. It shows that greater output can be secured by increasing the quantity combinations of both the factors X and Y. The producer increases the output from 100 units to 200 units by increasing the quantity combination of both the X and Y. The combination of OC of capital and OL of labor yield 100 units of production. The production can be increased to 200 units by increasing the capital from OC to OC1 and labor from OL to OL1.

    

(iii) Isoquants Cannot Cut Each Other:

 

The two isoquants can not intersect each other.

 

 

If two isoquant are drawn to intersect each other as is shown in this figure 12.5, then it is a negation of the property that higher Isoquant represents higher level of output to a lower Isoquant. The intersection at point E shows that the same factor combination can produce 100 units as well as 200 units. But this is quite absurd. How can the same level of factor combination produce two different levels of output, when the technique of production remains unchanged. Hence two isoquants cannot intersect each other.

 

(iv) Isoquants are Convex to the Origin:

 

This property implies that the marginal significance of one factor in terms of another factor diminishes along an ISO product curve. In other words, the isoquants are convex to the origin due to diminishing marginal rate of substitution.

 

 

In this figure 12.6 MRSKL diminishes from 5:1 to 4:1 and further to 3:1. This shows that as more and more units of capital (K) are employed to produce 100 units of the product, lesser and lesser units of labor (L) are used. Hence diminishing marginal rate of technical substitution is the reason for the convexity of an isoquant.

 

(v) Each Isoquant is Oval Shaped:

 

The iso product curve, is elliptical. This means that the firm produces only those segments of the iso-product curves which are convex to the origin and lie between the ridge lines. This is the economic region of production. 

Relevant Articles:

What is Production Function
Short Period Analysis of Production

Long Run Production With Variable Inputs

Isoquants
Properties of Isoquants
Isocost Lines
Marginal Rate of Technical Substitution
Optimum Factor Combination
 

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