Page 213 - DECO401_MICROECONOMIC_THEORY_ENGLISH

Microeconomic Theory

Notes
Fig. 10.4

Y
IQ Isoquant Curve is
100 Convex
90 A
80
70 B 3:1
Captial 60
50
40 C 2:1
D 1:1
30
20 100
10 Watches
0 X
10 20 30 40 50 60
Labour

3. Two IQ curves cannot intersect each other: We know that the Isoquant curve represents the unique
level of production and every point indicates the same level of production. If two Isoquant curves
intersect each other then the equal point will get in both the curves. This equal point will represent
two different levels of production. This is opposite to assumption of Isoquant curve. Every point in
Isoquant curve represents equal production. This is described by Fig. 10.5.

Fig. 10.5

Y Isoquant does not
Intersect

S
Capital R

IQ = 200
2
K IQ = 100
1
O
X
Labour

IQ curve indicates 100 units of production while IQ curve indicates 200 units of production. Both
1
2
curves cut itself at point S. We know that all the points are equal to each other on Isoquant curve which
represents the equal amount of production. So as per Fig. 10.5—
S = K = 100 units on IQ S = R = 200 units on IQ ∴ K = R
2,
1,
Self Assessment

Multiple choice questions:
4. The slope of Isoquant curve is .......................
(a) from up to down (b) from down to up
(c) from right to left (d) from left to right

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