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isoquant


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A curve showing the various combinations of different inputs which can be used to produce any given output. An isoquant shows only technically efficient combinations: the curve shows the minimum level of each input necessary for given levels of output and other inputs. What points on an isoquant are economically efficient depends on the prices of factor services—shown by an isocost line—and the economically efficient set of inputs is that at which an isoquant touches the lowest possible isocost line. The curvature of an isoquant shows how readily factor inputs can be substituted: if inputs are perfect substitutes the isoquant is a straight line; if inputs are perfect complements the isoquant is L-shaped. The isoquant becomes less straight as the inputs become poorer substitutes.

Subjects: Economics.


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