Useful Notes on 3 Most Important Types of Isoquant in Production

The Most Important types of Isoquant in Production are mentioned below:

1. Smooth and Convex Isoquant:

In a two-product framework, when one of the factors of production can be continuously substituted by the other, we get a smooth and convex isoquant (figure 8.8).

This isoquant is ‘smooth’ because the points on the isoquant are very close to each other. Close proximity of points on the isoquant signifies the fact that the effect of a slight reduction in one factor of production can be compensated by a marginal increase of the other.

2. L-Shaped Isoquant:

To produce a particular product, if only a fixed ratio of factors of production is allowed, the isoquant looks like ‘L’. For example, to produce one picture, one camera and one film are required.

If we increase the number of films keeping the number of cameras unchanged, it would not be possible to get more pictures. Similarly, increase in number of cameras without increasing the number of films will not produce more photographs. Diagrammatic representation of this case is given in figure 8.9.

Let us start with point B, which shows that one camera and one film produce one picture. Point A shows that one film and two cameras are used, but since one film cannot be used in two cameras at the same time, total output will be restricted to one picture only.

Similarly, point C represents the combination of one camera with two films, which will produce the same output, because out of two films available for use, one film will remain unutilised. All the three points A, B and C represent the same output level and lie on the same isoquant. The isoquant that joins A, B and C looks like ‘L’.

3. Linear Isoquant:

If fixed substitution exists among the factors of production, the isoquant becomes linear. Suppose, in a particular production process reduction of three units of labour can always be compensated by an increase of one unit of capital; then the shape of the isoquant becomes linear. Points A, B and C lie on the same isoquant indicating production of same output, say 30 units.

Point A shows that 30 units of output can be produced with 15 units of capital and 5 units of labour. Now if we withdraw one unit of capital from this input combination (i.e., if 14 units of capital are engaged instead of 15 Units) and use three ‘extra’ units of labour (i.e., 8 units of labour), the same amount of output (30 units) can be obtained (point B).

Similarly, withdrawal of another unit of capital and addition of three units of labour (i.e., 13 units of capital and 11 units of labour) will again produce 30 units of output (point C). Since, in this case each time we substitute one factor of production by the other by a fixed ratio (here, the ratio is 1:3), it is called fixed substitution and the isoquant representing this kind of substitution becomes a negatively sloped straight line.