ISOQUANTS

DEFINITION

— According to Ferguson, "An isoquant is a curve showing all possible combinations of inputs physically capable of producing a given level of output"

— In the words of Peterson, "An isoquant curve may exist defined as a curve showing the possible combinations of two variable factors that tin be used to produce the same total product"

The term Isoquant or Iso-product is composed of 'iso' implying equal and 'quant' implying quantity or product or output. Thus it ways equal quantity or equal output. Unlike factors are needed to produce goods. These factors may be substituted for one another. For example 100 watches may exist produced with 90 units of capital and 10 units of labour. The same number of watches (100 units) may besides be produced with such combinations as sixty units of capital and xx units of labour or with 40 units of capital and thirty units of labour. If different combinations of two factors yielding equal amount of total output are diagrammatically presented in the form of a curve, and so such a curve is called on Isoquant or Iso-product curve. Thus isoquant curve is that curve which shows the different possible combinations of two factor inputs yielding the same amount of output. Isoquant curves are too known equally Equal product or Iso-product or Production Indifference Curves. Isoquant bend is called production indifference curve since it is an extension of indifference curve analysis from the theory of consumption to the theory of production.An isoquant shows that if the business firm have power to substitute between the 2 unlike inputs (labour and machines) in order to produce the aforementioned level of output

If the distance between isoquants increases (bend shifting upward) output increases. Example q 1000 to q 1500 shift in the curve shows increase in the quantity produced where q = quantity produced.

By the isoquant curve nosotros came to know that if we want to produce sure quantity of good (q=g) ie 1000 appurtenances, nosotros can employee more labour and nosotros can utilize less machinery. In the aforementioned way for the same output that is (q=1000) we tin can utilize more number of machinery and we can employee less number of labour in the firm for production of aforementioned quantity. Here according to the budget and the financial position of the firm the producer can switch between the alternative production systems.

Eg: for producing 1000 appurtenances we can use 60 machines and 20 labours. OR we can use twenty machines and 60 labours for same production.

Linear isoquants

This liner isoquant is drawn if there is a perfect substitutability in the inputs of product. For example

Power constitute equipped to fire either oil or gas, various amounts of electric ability can be produced by called-for gas only or oil merely. Gas and oil are perfect substitutes here. Hence isoquants are direct lines.