It must be remembered that optimum factor combination factors represents such a combination of labor and capital where either, the production of the firm be maximized or the cost of the firm be minimized. In this respect we will discuss the following concept of Isoquant and MRTS. Isocost line, equilibrium of the firm.
It is also brought to the notice of the reader that Isoquant approach to firm behaviors is neo-classical in nature and it has been presented by John Hicks and the analysis is similar to that of indifference curve approach. Simply an Isoquant is a curve which shows that combination of labor and capital which can produce a specific level of output.
Equal product curve is a curve which represents those pairs of two factors like labor and capital which produce an equal level of output.
Professor Ferguson defines it as:
An Isoquant represents different input factor combinations or input ratios that may be used to produced a specific level of output. For a movement along an Isoquant the level of output remains constant but the input ratio changes.
The important property of an Isoquant is this that it shows a specific level of output.
Hence the level of output remains fixed along an Isoquant while the ratio of K to L goes on changing along an Isoquant.
It is also brought to the notice of the reader that Isoquant approach to firm behaviors is neo-classical in nature and it has been presented by John Hicks and the analysis is similar to that of indifference curve approach. Simply an Isoquant is a curve which shows that combination of labor and capital which can produce a specific level of output.
Equal product curve is a curve which represents those pairs of two factors like labor and capital which produce an equal level of output.
Professor Ferguson defines it as:
An Isoquant represents different input factor combinations or input ratios that may be used to produced a specific level of output. For a movement along an Isoquant the level of output remains constant but the input ratio changes.
The important property of an Isoquant is this that it shows a specific level of output.
Hence the level of output remains fixed along an Isoquant while the ratio of K to L goes on changing along an Isoquant.
