Isoquants, Isoproduct, Iso cost Marginal Rate of Technical Substitution

1. ISO-QUANTS
JITHIN K THOMAS
Berchmans Institute of Management Studies

2. ISO-QUANTS
• Iso = equal
• Quant = quantity
• Iso - Quant = equal quantity = equal output

3. Iso-quant Curve
• Iso-quant curve is that curve which shows the
different combinations of two factors yielding
the same total product.

4. Iso-quant Curve

5. Iso-quant Curve
• Assumptions
– Two factors of production
– Divisible factor
– Constant technique
– Possibility of Technical substitution
– Efficient combinations

6. Iso-product Schedule
• Iso-product Schedule shows the different
combinations of two inputs that yield the
same level of output.
• Iso-product Map shows a set of Iso-product
curves.

7. Iso-Product Map

8. Properties of Iso-Product Curves
• Iso-Product Curves slopes downwards from left to
right
• Isoquants are convex to the origin
• Two Iso-Product curves never cut each other
• Higher Iso-Product curves represent higher level
of output
• Isoquants need not be parallel to each other
• No isoquant can touch either axis
• Each isoquant is oval – shaped

9. Marginal Rate of Technical Substitution
• Marginal Rate of Technical Substitution is the
rate at which one input can be substituted for
another input without changing the level of
output.
• Iso-quant Schedule
Combination labour Capital MRTS Output
1 5 9 - 100
2 10 6 3:5 100
3 15 4 2:5 100
4 20 3 1:5 100

10. Iso-Cost Line
• It is a locus of all combination of two or more
inputs which the producer’s budget can buy
using his fixed outlay at fixed input pries .

11. Iso-Cost Line