With this video, you’ll be able to understand what isoquants are, and how they can help analyse production. You’ll learn the main characteristics of different types of isoquants, as well as what the marginal rate of technical substitution is.
An isoquant shows the different combinations of K and L that produce a certain amount of a good or service. Graphically, the shape of an isoquant will depend on the type of good or service we are looking at. The shape of isoquants is also in close relation with the terms marginal rate of technical substitution and returns to scale.
It is also worth discussing isoclines, which are lines that ‘join up’ the different production regions. Having defined and decided the optimal levels of K and L we need to produce the different quantities, the line that passes through these optimal levels is an isocline. In other words, it is the line that joins points where the marginal rate of technical substitution of each isoquant is constant:
Learn more by reading the dictionary entry.