Isoquant - a graph that is a curve that displays various combinations of costs in a constant volume of product production. This phenomenon is also called characteristic equal output lines.
Value
Isoquant is a graph that allows you to understand how to get the highest profit while saving production volume. In this case, a combination of various types of costs is assumed. A review of various levels of costs. The positive slope of the graph indicates a direct relationship between the increase in different costs. A negative curve shows that when certain costs are reduced, others will inevitably increase. We give one more definition. Given that the main field of application of this concept is production, the isoquant is the curve of constant product output. All points on this graph reflect a different combination of certain factors of production to create the same number of goods.
Map
If we pay attention to the theory of production functions, we can say that the isoquant is a geometric reflection of resources in space. This graph shows how a different combination of production resources gives the same amount of output. An isoquant is a curve that cannot intersect with a similar one. Each next line, which is located further than the origin, shows a larger output, compared to the previous one. The totality of such schemes creates an isoquant map. The boundary rate of substitution of a certain resource for another falls when moving along the graph.
Example
An isoquant is a line that can be convex with respect to the origin. Consider an example. The farmer is able to produce fifty tons of grain thanks to five combines and the work of 5 employees. There is another option for obtaining a similar result. Four combines and ten workers can be used. An isoquant with a downward right slope indicates the possibility of replacing one factor of production with another. The graph may look like an indifference curve. The point at which iso-quanta and isocosts converge reflects a combination of factors in which a certain number of products will be manufactured at minimal cost.
Types
The graphic display described by us defines a combination of interchangeability and complementarity of resources. With a perfect substitution, the isoquant gets a linear form. In the case of tight complementarity of resources, the graph is a point.
