Iso-Quant Curve - Definitions, Assumptions and Properties

12/18/2020 Iso-Quant Curve: Definitions, Assumptions and Properties
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Iso-Quant Curve:
Definitions,
Assumptions and
Properties
Article Shared by Manoj Kumar
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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 = output.
Thus it means equal quantity or equal product.

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Different factors are needed to produce a good.
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These factors may be substitutedMax
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https://www.economicsdiscussion.net/iso-quant-curve/iso-quant-curve-definitions-assumptions-and-properties/6998 1/44
A given quantity of output may be produced with

different combinations of factors. Iso-quant
curves are also known as Equal-product or Iso-
product or Production Indifference curves. Since
it is an extension of Indifference curve analysis
from the theory of consumption to the theory of
production.
Thus, an Iso-product or Iso-quant curve is that

curve which shows the different combinations of
two factors yielding the same total product. Like,
indifference curves, Iso- quant curves also slope
downward from left to right. The slope of an Iso-
quant curve expresses the marginal rate of
technical substitution (MRTS).
Definitions:
“The Iso-product curves show the different
combinations of two resources with which a firm
can produce equal amount of product.” Bilas
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combinations that will produce a given output.” Privacy - Terms
Samuelson
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“An Iso-quant 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.” Peterson
“An Iso-quant is a curve showing all possible

combinations of inputs physically capable of
producing a given level of output.” Ferguson
Assumptions:
The main assumptions of Iso-quant curves
are as follows:
1. Two Factors of Production:

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Factors of production can be divided into small

parts.
3. Constant Technique:
Technique of production is constant or is known
before hand.
4. Possibility of Technical Substitution:
The substitution between the two factors is

technically possible. That is, production function
is of ‘variable proportion’ type rather than fixed
proportion.
5. Efficient Combinations:
Under the given technique, factors of production

can be used with maximum efficiency.
Iso-Product Schedule:
Let us suppose that there are two factor inputs—
labour and capital. An Iso-product schedule
shows the different combination of these two
inputs that yield the same level of output as
shown in table 1.

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The table 1 shows that the five combinations of

labour units and units of capital yield the same
level of output, i.e., 200 metres of cloth. Thus,
200 metre cloth can be produced by combining.
(a) 1 units of labour and 15 units of capital
(b) 2 units of labour and 11 units of capital
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(c) 3 units of labour and 8 units of capital
(d) 4 units of labour and 6 units of capital
(e) 5 units of labour and 5 units of capital

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Iso-Product Curve:
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From the above schedule iso-product curve can

be drawn with the help of a diagram. An. equal
product curve represents all those combinations
of two inputs which are capable of producing the
same level of output. The Fig. 1 shows the various
combinations of labour and capital which give the
same amount of output. A, B, C, D and E.
Iso-Product Map or EqualNow

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An Iso-product map shows a set of iso-product

curves. They are just like contour lines which
show the different levels of output. A higher iso-
product curve represents a higher level of output.
In Fig. 2 we have family iso-product curves, each
representing a particular level of output.
The iso-product map looks like the indifference of

consumer behaviour analysis. Each indifference
curve represents particular level of satisfaction
which cannot be quantified. A higher indifference
curve represents a higher level of satisfaction but
we cannot say by how much the satisfaction is
more or less. Satisfaction or utility cannot be
measured.
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An iso-product curve, on the other hand,

represents a particular level of output. The level
of output being a physical magnitude is
measurable. We can therefore know the distance
between two equal product curves. While
indifference curves are labeled as IC1, IC2, IC3,
etc., the iso-product curves are labelled by the
units of output they represent -100 metres, 200
metres, 300 metres of cloth and so on.
Properties of Iso-Product Curves:

The properties of Iso-product curves are
summarized below:
1. Iso-Product Curves Slope Downward

from Left to Right:
They slope downward because MTRS
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The downward sloping iso-product curve

can be explained with the help of the
following figure:
The Fig. 3 shows that when the amount of labour

is increased from OL to OL1, the amount of
capital has to be decreased from OK to OK1, The
iso-product curve (IQ) is falling as shown in the
figure.
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The possibilities of horizontal, vertical,

upward sloping curves can be ruled out
with the help of the following figure 4:
(i) The figure (A) shows that the amounts of both

the factors of production are increased- labour
from L to Li and capital from K to K1. When the
amounts of both factors increase, the output must
increase. Hence the IQ curve cannot slope
upward from left to right.
(ii) The figure (B) shows that the amount of

labour is kept constant while the amount of
capital is increased. The amount of capital is
increased from K to K1. Then the output must
increase. So IQ curve cannot be a vertical straight
line.
(iii) The figure (C) shows a horizontal curve. If it

is horizontal the quantity of labour increases,
although the quantity of capital remains constant.
When the amount of capital is increased, the level
of output must increase. Thus, an IQ curve cannot
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2. Isoquants are Convex to the Origin: Read Next Story
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Like indifference curves, isoquants are convex to

the origin. In order to understand this fact, we
have to understand the concept of diminishing
marginal rate of technical substitution (MRTS),
because convexity of an isoquant implies that the
MRTS diminishes along the isoquant. The
marginal rate of technical substitution between L
and K is defined as the quantity of K which can be
given up in exchange for an additional unit of L.
It can also be defined as the slope of an isoquant.
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It can be expressed as:
MRTSLK = – ∆K/∆L = dK/ dL
Where ∆K is the change in capital and AL is the

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Equation (1) states that for an increase in the use
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of labour, fewer units of capital will be used. In
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other words, a declining MRTS refers to the

falling marginal product of labour in relation to
capital. To put it differently, as more units of
labour are used, and as certain units of capital are
given up, the marginal productivity of labour in
relation to capital will decline.
This fact can be explained in Fig. 5. As we move

from point A to B, from B to C and from C to D
along an isoquant, the marginal rate of technical
substitution (MRTS) of capital for labour
diminishes. Everytime labour units are increasing
by an equal amount (AL) but the corresponding
decrease in the units of capital (AK) decreases.
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Thus it may be observed that due to falling

MRTS, the isoquant is always convex to the
origin.
3. Two Iso-Product Curves Never Cut Each

Other:
As two indifference curves cannot cut each other,
two iso-product curves cannot cut each other. In
Fig. 6, two Iso-product curves intersect each
other. Both curves IQ1 and IQ2 represent two
levels of output. But they intersect each other at
point A. Then combination A = B and
combination A= C. Therefore B must be equal to
C. This is absurd. B and C lie on two different iso-
product curves. Therefore two curves which
represent two levels of output cannot intersect
each other.

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4. Higher Iso-Product Curves Represent

Higher Level of Output:
A higher iso-product curve represents a
higher level of output as shown in the
figure 7 given below:
In the Fig. 7, units of labour have been taken on

OX axis while on OY, units of capital. IQ1
represents an output level of 100 units whereas
IQ2 represents 200 units of output.
5. Isoquants Need Not be Parallel to Each

Other:
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different isoquant schedules need not be Privacy - Terms
necessarily equal. Usually they are found

different and, therefore, isoquants may not be
parallel as shown in Fig. 8. We may note that the
isoquants Iq1 and Iq2 are parallel but the
isoquants Iq3 and Iq4 are not parallel to each
other.
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. These
logical absurdities for OL units of labour alone
are unable to produce anything. Similarly, OC
units of capital alone cannot produce anything
without the use of labour. Therefore as seen in
figure 9, IQ and IQ1 cannot be isoquants.

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7. Each Isoquant is Oval-Shaped.

It means that at some point it begins to recede
from each axis. This shape is a consequence of the
fact that if a producer uses more of capital or
more of labour or more of both than is necessary,
the total product will eventually decline. The firm
will produce only in those segments of the
isoquants which are convex to the origin and lie
between the ridge lines. This is the economic
region of production. In Figure 10, oval shaped
isoquants are shown.

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Curves OA and OB are the ridge lines and in

between them only feasible units of capital and
labour can be employed to produce 100, 200, 300
and 400 units of the product. For example, OT
units of labour and ST units of the capital can
produce 100 units of the product, but the same
output can be obtained by using the same
quantity of labour T and less quantity of capital
VT.
Thus only an unwise entrepreneur will produce in

the dotted region of the iso-quant 100. The dotted
segments of an isoquant are the waste- bearing
segments. They form the uneconomic regions of
production. In the up dotted portion, more
capital and in the lower dotted portion more
labour than necessary is employed. Hence GH,
JK, LM, and NP segments of the elliptical curves
are the isoquants.
Difference between Indifference Curve

and Iso-Quant Curve:
The main points of difference between
indifference curve and Iso-quant curve are
explained below:
1. Iso-quant curve expresses the quantity of

output. Each curve refers to given quantity of
output while an indifference curve to the quantity
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more satisfaction than the combination on a

lower indifference curve of production.
2. Iso-quant curve represents the combinations of

the factors whereas indifference curve represents
the combinations of the goods.
3. Iso-quant curve gives information regarding

the economic and uneconomic region of
production. Indifference curve provides no
information regarding the economic and
uneconomic region of consumption.
4. Slope of an iso-quant curve is influenced by the

technical possibility of substitution between
factors of production. It depends on marginal rate
of technical substitution (MRTS) whereas slope of
an indifference curve depends on marginal rate of
substitution (MRS) between two commodities
consumed by the consumer.
Principle of Marginal Rate of

Technical Substitution [June-2005]:
The principle of marginal rate of technical
substitution (MRTS or MRS) is based on the
production function where two factors can be
substituted in variable proportions in such a way
as to produce a constant level of output. The
marginal rate of technical substitution between
two factors C (capital) and L (labour), MRTS
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the rate at which L can be substituted for C in the
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production of good X without changing the

quantity of output.
As we move along an isoquant downward to the

right each point on it represents the substitution
of labour for capital. MRTS is the loss of certain
units of capital which will just be compensated
for by additional units of labour at that point. In
other words, the marginal rate of technical
substitution of labour for capital is the slope or
gradient of the isoquant at a point. Accordingly,
slope = MRTSLC = AC/AL. This can be
understood with the aid of the isoquant schedule,
in Table 2.
The above table 2 shows that in the second

combination to keep output constant at 100 units,
the reduction of 3 units of capital requires the
addition of 5 units of labour, MRTSLC = 3 : 5. In
the third combination, the loss of 2 units of
capital is compensated for by 5 more units of
labour, and so on.

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In Fig. 11 at point B, the marginal rate of technical

substitution is AS/SB, t point G, it is BT/TG and
at H, it is GR/RH. The isoquant AH reveals that
as the units of labour are successively increased
into the factor- combination to produce 100 units
of good X, the reduction in the units of capital
becomes smaller and smaller.
It means that the marginal rate of technical

substitution is diminishing. This concept of the
diminishing marginal rate of technical
substitution (DMRTS) is parallel to the principle
of diminishing marginal rate of substitution in
the indifference curve technique. This tendency of
diminishing marginal substitutability of factors is
apparent from Table 2 and Figure 11.
The MRTSLc continues to decline from 3: 5 to 1: 5

whereas in the Figure 11 the vertical lines below
the triangles on the isoquant become smaller and
smaller as we move downward soNow
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AS. Thus, the marginal rate of technical
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for capital. It means that the isoquant must be

convex to the origin at every point.
Iso-Cost Line:
The iso-cost line is similar to the price or budget
line of the indifference curve analysis. It is the
line which shows the various combinations of
factors that will result in the same level of total
cost. It refers to those different combinations of
two factors that a firm can obtain at the same
cost. Just as there are various isoquant curves, so
there are various iso-cost lines, corresponding to
different levels of total output.
Definition:
Iso-cost line may be defined as the line which
shows different possible combinations of two
factors that the producer can afford to buy given
his total expenditure to be incurred on these
factors and price of the factors.
Explanation:
The concept of iso-cost line can be explained with
the help of the following table 3 and Fig. 12.
Suppose the producer’s budget for the purchase
of labour and capital is fixed at Rs. 100. Further
suppose that a unit of labour cost the producer
Rs. 10 while a unit of capital Rs. 20.
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From the table cited above, the producer

can adopt the following options:
(i) Spending all the money on the purchase of

labour, he can hire 10 units of labour (100/10 =
10)
(ii) Spending all the money on the capital he may

buy 5 units of capital.
(iii) Spending the money on both labour and

capital, he can choose between various possible
combinations of labour and capital such as (4, 3)
(2, 4) etc.
Diagram Representation:

In Fig. 12, labour is given on OX-axis and Back
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on OY-axis. The points A, B, C and D convey the
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different combinations of two factors, capital and
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labour which can be purchased by spending Rs.

100. Point A indicates 5 units of capital and no
unit of labour, while point D represents 10 units
of labour and no unit of capital. Point B indicates
4 units of capital and 2 units of labour. Likewise,
point C represents 4 units of labour and 3 units of
capital.
Iso-Cost Curves:
After knowing the nature of isoquants which

represent the output possibilities of a firm from a
given combination of two inputs. We further
extend it to the prices of the inputs as represented
on the isoquant map by the iso-cost curves.
These curves are also known as outlay lines, price

lines, input-price lines, factor-cost lines,
constant-outlay lines, etc. Each iso-cost curve
represents the different combinations of two
inputs that a firm can buy for a given sum of
money at the given price of each input.
Figure 13 (A) shows three iso-cost curves each

represents a total outlay of 50, 75 and 100
respectively. The firm can hire OC of capital or
OD of labour with Rs. 75. OC is 2/3 of OD which
means that the price of a unit of labour is 1/2
times less than that of a unit of capital.
The line CD represents the price Now

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and labour. Prices of factors remaining the same,
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shift upward to the right as EF parallel to CD, and Privacy - Terms
if the total outlay is reduced it will shift

downwards to the left as AB.
The iso-costs are straight lines because factor

prices remain the same whatever the outlay of the
firm on the two factors.
The iso-cost curves represent the locus of all

combinations of the two input factors which
result in the same total cost. If the unit cost of
labour (L) is w and the unit cost of capital (C) is r,
then the total cost: TC = wL + rC. The slope of the
iso-cost line is the ratio of prices of labour and
capital i.e., w/r.
The point where the iso-cost line is tangent to an

isoquant shows the least cost combination of the
two factors for producing a given output. If all
points of tangency like LMN are joined by a line,
it is known as an output-factor curve or least-
outlay curve or the expansion path of a firm.
It shows how the proportions of the

Nowtwo factors
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capital and labour used to produce 200 (IQ1) Privacy - Terms
units of the product are different from the

proportions of these factors used to produce 300
(IQ2) units or 100 units at the lowest cost.
Like the price-income line in the indifference

curve analysis, a relative cheapening of one of the
factors to that of another will extend the iso-cost
line to the right. If one of the factors becomes
relatively dearer, the iso-cost line will contract
inward to the left.
Given the price of capital, if the price of labour

falls, the isocost line EF in Panel (B) of figure 13
will extend to the right as EG and if the price of
labour rises, the iso-cost line EF will contract
inward to the left as EH, if the equilibrium points
L, M, and N are joined by a line. It will be called
the price-factor curve.
Ridge Lines:
One knows from the iso-quant curves the extent
to which production should be carried out. Lines
which represent the limits of the economic region
of production are called ridge lines. Ridge lines
join those points on different iso-quant curves
which determine the economic limits of
production. The importance of ridge lines is
explained with the help of Figure 14.

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Iso-quant curves at point A and D; B and E; and C

and F begin to recede from each axes. The
segments above or below these points A B C and
D E F, one gets OL and OR lines. OR and OL lines
are called Ridge Lines. These ridge lines show the
economical limits for the firm to produce only in
those segments of the iso-quants which lie
between the ridge lines.
It can be explained with the help of an example.

In fig. 14, combination of OL3 units of labour and
ON3 units of land can produce 60 quintals of
wheat, ON3 amount of land is the minimum
required to produce 60 quintals of wheat.
While using ON3 amount of land, at point C, if

more than OL3 units of labour are used, total
output will be less than 60 quintals of wheat. It
means beyond OL3 units of labour, their
marginal productivity will become negative
causing total output to be less than 60 quintals.
In other words, after OL3, marginal productivity
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of labour will be zero.
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If at point ‘C’ more than OL3 units of labour are

used then to keep the total output of 60 quintals
of wheat constant, more than ON3 units of land
will have to be used. It will be unwise and
irrational decision. It will unnecessarily increase
the cost of production. Thus to produce outside
point ‘C’ will be uneconomic. At point ‘C’
marginal productivity of labour will be zero.
In the same way, we can find out point A and B

on iso-quant curves IP) and IP2 where marginal
productivity of labour will be zero. The lines
joining these points are called ridge lines. Ridge
line OL, therefore, is the locus of points where
marginal productivity of labour is zero. Point F of
IP3 indicates that to produce 60 quintals of
wheat, OR3 units of labour and OM3 units of land
are required. OR3 units of labour are the
minimum units to produce this level of output. If
keeping OR3 units of labour constant, more than
OM3 units of labour are used, the total output
will be less than 60 quintals of wheat. It implies
that after point ‘F’.
Accordingly, points ‘D’ and ‘E’ on IPi and IP2

curves represent zero marginal productivity of
land. Production thus, will be done on the
segment below point ‘D’, ‘E’ and ‘F’. These points
have been joined by OR ridge line.
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Combination:
In simple words, producer’s equilibrium implies
to that situation in which producer maximizes his
profit. In short, the producer is producing given
amount of output with least cost combination of
factors. It is also known as optimum combination
of the factors.
Optimum combination is that combination

at which either:
(i) The output derived from a given level of inputs

is maximum or
(ii) The cost of producing given output is

minimum.
For producer’s equilibrium or optimum

combination, it must fulfill following two
conditions as:
(i) At the point of equilibrium the iso-cost line

must be tangent to isoquant curve.
(ii) At point of tangency i.e., iso-quant curve must

be convex to the origin or MRTSLk must be
falling.
The iso-cost line gives information

regarding factor prices and financial
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With a given outlay and prices of two factors, the

firm obtains least cost combination of factors,
when the iso-cost line becomes tangent to an iso-
product curve. Let us explain it with the following
Fig. 15.
In Figure 15, P1L1 iso-cost line has become

tangent to iso-product curve (representing 500
units of output) at point E. At this point, the slope
of the iso-cost line is equal to the iso-product
curve. The slope of the iso- product curve
represents MRTS of labour for capital. The slope
of the iso-cost line represents the price ratio of
the two factors.
Slope of Iso-quant curve = Slope of Iso-cost curve
MRTSLk = – ∆L/∆L = MPL/MPK = PL/PK
[where ∆K → change in capital, ∆L → change in

labour, MPL → Marginal Physical Product of
Labour, MPk – Marginal PhysicalPremiums
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of
capital, PL Price of Labour, and PK → Price of
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capital, MRTSLK = Marginal Rate of Technical

Substitution of labour and capital.]
The firm employs OM units of labour and ON

units of capital. The producing firm is in
equilibrium. It obtains least cost combination of
the two factors to produce 5 00 units of the
commodity.
The points such as H, K, R and S lie on higher iso-

cost lines. They require a larger outlay, which is
beyond the financial resources of the firm.
The same can be explained with the help of a

numerical example. Suppose the firm decides to
produce 10 units of output. The two factors are
labour and capital. The price of labour per hour is
Rs. 10 and the price of machine use per hour is
Rs. 10. The following table shows the various
combinations of labour and machine capital
hours required to produce 10 units of output.

It is clear from this table that thePremiums
least cost of
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production is P2. A rational producer will chose
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this combination of factors, given the factor Privacy - Terms
prices. Expansion path means locus of all such

points that shows least cost combination of
factors corresponding to different levels of
output.
Expansion Path:
As financial resources of a firm increase, it would
like to increase its output. The output can only be
increased if there is no increase in the cost of the
factors. In other words, the level of total output of
a firm increases with increase in its financial
resources.
By using different combinations of factors a firm

can produce different levels of output. Which of
the optimum combinations of factors will be used
by the firm is known as Expansion Path. It is also
called Scale-line.
“Expansion path is that line which reflects least

cost method of producing different levels of
output.” Stonier and Hague

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Expansion path can be explained with the help of

Fig. 16. On OX-axis units of labour and on OY-
axis units of capital are given.
The initial iso-cost line of the firm is AB. It is

tangent to IQ at point E which is the initial
equilibrium of the firm. Supposing the cost per
unit of labour and capital remains unchanged and
the financial resources of the firm increase.
As a result, firm’s new iso-cost-line shifts to the

right as CD. New iso-cost line CD will be parallel
to the initial iso-cost line. CD touches IQ1 at point
E1 which will constitute the new equilibrium
point. If the financial resources of the firm further
increase, but cost of factors remaining the same,
the new iso-cost line will be GH.
It will be tangent to Iso-quant curve IQ2 at point

E2 which will be the new equilibrium point of the
firm. By joining together equilibrium points E, E1
and E2, one gets a line called scale-line or
Expansion Path. It is because a firm expands its
output or scale of production in conformity with
this line.
Isoquant Curve and Returns to a

Factor:
Returns to a factor refers to the behavior of
output in response to changing application of one
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factor of production while other factors
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remaining constant. As in the case of returns to
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scale, there are three different aspects of returns

to a factor, viz., increasing returns, constant
returns and diminishing returns.
The returns to a factor can be explained using

isoquant techniques. It is assumed that capital is
a fixed input and labour is a variable input.
Different Stages of Returns to a Factor:
The different returns to a factor can be

explained as follows:
(i) Increasing Returns to a Factor:
It occurs when additional application of the

variable factor i.e., labour increases total output
at increasing rate. Fig. 17 explains the situation of
increasing returns to a factor.
In Fig. 17 capital is taken constant at OR units.

The line RP shows how larger quantities of labour
can be employed to expand production. It is
called output path.
The isoquant curves for 100, 200, 300 and 400

units of output shows that output is increasing by
a constant amount by 100 units. These isoquants
intersect the output path RP at point E, F, G and
H.
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We see here that the distance between successive

isoquant curves is decreasing, that is, less and
less labour is needed for every additional 100
units of output. This means an increasing
marginal product of labour. However, the
distance EF is greater than FG and FG is greater
than GH i.e.
EF = FH = GH
This means that 100 units increase in output can

be obtained by employing successively lesser
increments of labour. Let us suppose that EF is
20 units of labour and FG is 10 units of labour.
Then from E to F the additional 100 units of
output are obtained by employing additional 20
units of labour. From F to G additional 100 units
of output is obtained by employing only 10 more
units of labour. In short, the marginal product of
labour increases when output is expanded along
the output path RP. Now A Term Plan Which Also Gives Your
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(ii) Diminishing Returns to a Factor. Diminishing
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returns to a factor is a situation when increasing
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application of the variable factor increases total

output only at the diminishing rate.
Fig. 18 illustrates the situation of diminishing

rate. When capital is taken constant at OR and
production is expanded by adding more labour,
the distance between successive Isoquants
becomes increasingly greater, that is even more
and more labour is needed for every additional
100 units of output. This shows a diminishing
marginal product of labour. The distance EF is
less than FG and FG is less than GH.
EF < FG < GH Thus, 100 units increase in output

can be obtained only by employing successively
greater increments of labour. Between E to F
additional 100 units of output is obtained by
applying additional 10 units of labour. Between F
to G additional 100 units of output is obtained by
applying additional 20 units of labour. Therefore,
the marginal product of labour diminishes when
output is expanded along the output path RP.

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(iii) Constant Returns to a Factor:
A constant return to a factor occurs when

increasing application of the variable factor
increases total output only at a constant rate. Fig.
19, we see that when capital is taken constant at
OR and production is increased by adding more
labour, the distance between isoquants remains
constant, so that same amount of labour is
needed for every additional 100 units of output.
This means a constant marginal product (MP) of

labour. In other words, 100 units increase in
output can be obtained by employing equal
increment of labour. The distance between
different iso-quants remains equal. It can be
written as;
EF = FG = GH
Difference between ReturnsNow

to Scale
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With the help of Isoquant diagram, we can draw Read Next Story
the difference between returns to scale and Privacy - Terms
returns to factor. Returns to scale implies that

output is increased as all the inputs are increased
in the same proportion. However, Fig. 20 shows
difference between returns to scale and returns a
factor.
In Fig. 20 on OX-axis labour is measured and on

OY-axis capital. We draw straight lines OA, OB
and OC through the origin. These lines or rays
show that both labour and capital are increased to
expand output. 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.
Moving along a ray like OA means to increase

production or scale always with the same ratio of
inputs. For instance the isoquants in Fig. 20 show
constant returns to scale. The isoquants for 100,
200, 300 and 400 units of output intersect the
straight lines OA, OB and OC at equal distance.
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Thus; it requires twice as much ofMaxboth
capital
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and labour to produce 200 units instead of 100
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units; 50 percent further more to produce 300

instead of 200 and so on. In other words the rays
show the returns to scale which implies that to
increase output both the inputs should be
increased in the same proportion.
Returns to a factor or change in proportion refers

one input is held constant while production is
expanded by increasing the quantity of the other
input. The horizontal straight line RP is drawn on
the assumption that capital is kept constant at OR
and production expanded by adding more labour.
The vertical straight line LM is drawn on the
assumption that labour is held constant at OL
and output is expanded by adding more capital.
As we move along these lines the amount of one

input varies while of the other remains constant.
Thus proportion between the two outputs
undergoes a change. The returns to a factor can
be explained either by RP line or LM line
depending whether capital is held constant or
labour is held constant. With capital constant at
R; the producer moves from to E, from E to F to
G.
Therefore, the successive difference between the

isoquants is increasing (FG > EF). This means
that 100 units of additional output can be
obtained by employing successively
Nowgreater
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increments of labour. This meansMaxdiminishing
marginal product of labour. This is the case of Read Next Story
diminishing returns to a factor. In short, both the Privacy - Terms
concepts of returns to scale and returns to a

factor (change in factor proportions) can be
explained by using the technique of Isoquants.
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TABLE OF CONTENTS
Definitions:
Assumptions:
Iso-Product Schedule:
Iso-Product Curve:
Iso-Product Map or Equal Product Map:
Properties of Iso-Product Curves:
Difference between Indifference Curve
and Iso-Quant Curve:
Principle
ABOUT of Marginal
US Rate of Technical
Substitution [June-2005]:
Iso-Cost Line:
 Publish
Ridge Lines:
Your Article
Producer’s Equilibrium or Optimum
nation
Combi Privacy
of Factors or Least Cost
Policy
Combination:
Expansion Path:
Isoquant Curve and Returns to a Factor:
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12/18/2020 Iso-Quant Curve: Definitions, Assumptions and Properties

Iso-Quant Curve: Definitions,

The term Iso-quant or Iso-product is composed of

Thus it means equal quantity or equal product.

Read Next Story

A given quantity of output may be produced with

Thus, an Iso-product or Iso-quant curve is that

“Iso-product curve shows the different input Read Next Story

combinations that will produce a given output.” Privacy - Terms

“An Iso-quant curve may be defined as a curve

“An Iso-quant is a curve showing all possible

1. Two Factors of Production:

Read Next Story

2. Divisible Factor: Privacy - Terms

Factors of production can be divided into small

4. Possibility of Technical Substitution:

The substitution between the two factors is

Under the given technique, factors of production

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Read Next Story

The table 1 shows that the five combinations of

(a) 1 units of labour and 15 units of capital

(b) 2 units of labour and 11 units of capital

(c) 3 units of labour and 8 units of capital

(d) 4 units of labour and 6 units of capital

(e) 5 units of labour and 5 units of capital

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From the above schedule iso-product curve can

Iso-Product Map or EqualNow

Read Next Story

An Iso-product map shows a set of iso-product

The iso-product map looks like the indifference of

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Read Next Story

An iso-product curve, on the other hand,

Properties of Iso-Product Curves:

1. Iso-Product Curves Slope Downward

The downward sloping iso-product curve

The Fig. 3 shows that when the amount of labour

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The possibilities of horizontal, vertical,

(i) The figure (A) shows that the amounts of both

(ii) The figure (B) shows that the amount of

(iii) The figure (C) shows a horizontal curve. If it

2. Isoquants are Convex to the Origin: Read Next Story

Like indifference curves, isoquants are convex to

It can be expressed as:

MRTSLK = – ∆K/∆L = dK/ dL

Where ∆K is the change in capital and AL is the

other words, a declining MRTS refers to the

This fact can be explained in Fig. 5. As we move

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Thus it may be observed that due to falling

3. Two Iso-Product Curves Never Cut Each

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4. Higher Iso-Product Curves Represent

In the Fig. 7, units of labour have been taken on

5. Isoquants Need Not be Parallel to Each

It so happens because the rate of substitution in Read Next Story