isoquantkurver

Isoquant curves, or isoquantkurver in Swedish, are a fundamental concept in production theory. They represent all combinations of two inputs that yield the same level of output under a given production function F(K, L) = Q. For a fixed output level Q*, the isoquant is the set of input bundles (K, L) such that F(K, L) = Q*. They are the input-side analogues of indifference curves in consumer theory.

Key properties

Isoquant curves are typically downward sloping: if you increase one input, you can reduce the other while keeping output constant. They do not cross each other. Higher levels of output correspond to isoquants that lie farther from the origin, assuming more is better. In most cases isoquants are convex to the origin, reflecting a diminishing marginal rate of technical substitution (MRTS); with constant MRTS, isoquants become straight lines, corresponding to perfect substitutes.

Slope and MRTS

The slope of an isoquant is the marginal rate of technical substitution, given by dL/dK|Q = - MP_K / MP_L, where MP_K and MP_L are the marginal products of capital and labor. The magnitude MRTS_KL = MP_K / MP_L indicates how much of L can be reduced when K is increased by one unit, keeping output constant.

Applications

Isoquants are central to cost minimization. When combined with isocost lines (cost constraints determined by input prices), the least-cost input combination for producing a given output is found at the tangency point where MP_K/MP_L = r/w (prices of capital and labor). The concept extends to more than two inputs, producing isoquants in higher-dimensional input spaces.