The Isoquant Curve

The Isoquant Curve • Isoquant curve – a curve that represents combinations of factors of production that results in equal amounts of output. • A point on the isoquant curve is technically efficient.

The Isoquant Curve

The Isoquant Curve

The Isoquant Curve • The isoquant curve is bowed inward because of the law of diminishing marginal productivity.

The Isoquant Curve • Marginal rate of substitution – the rate at which one factor must be added to compensate for the loss of another factor, to keep output constant. • It is the slope of the isoquant curve.

The Isoquant Curve • The absolute value of the slope at a point on the isoquant curve equals the ratio of the marginal productivity of labor to the marginal productivity of machines. MPlabor Slope = MPmachine = Marginalrate of substitution

The Isoquant Curve • Isoquant map – a set of isoquant curves that show technically efficient combinations of inputs that can produce different levels of output.

An Isoquant Map