Line Dynamics. Taut Curve Relax Curve Taut Curve Relax Curve.
The Isoquant Curve
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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.
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Transcript of 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.
onsubstituti of rate MarginalMP
MPSlope
machine
labor
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
