Dominick Salvatore Schaums Outline of Microeconomics, 4th edition Schaums Outline Series 2006

CHAP. 6] THEORY OF PRODUCTION 121
6.4 PRODUCTION WITH TWO VARIABLE INPUTS: ISOQUANTS
We now turn to the case where the firm has only two factors of production, labor and capital, both of which
are variable. Since all factors are variable, we are dealing with the long run.
An isoquant shows the different combinations of labor (L) and capital (K) with which a firm can produce a
specific quantity of output. A higher isoquant refers to a greater quantity of output and a lower one, to a smaller
quantity of output.
EXAMPLE 5.
Table 6.2 gives points on three different isoquants.
Isoquant
I
Table 6.2
Isoquant
II
Isoquant
III
L K L K L K
2 11 4 13 6 15
1 8 3 10 5 12
2 5 4 7 6 9
3 3 5 5 7 7
4 2.3 6 4.2 8 6.2
5 1.8 7 3.5 9 5.5
6 1.6 8 3.2 10 5.3
7 1.8 9 3.5 11 5.5
Plotting these points on the same set of axes and connecting them by smooth curves we get the three isoquants shown in
Fig. 6-3. The firm can produce the output specified by isoquant I by using 8K and 1L (point B) or by using 5K and 2L
(point C) or any other combination of L and K on isoquant I. Isoquants (as opposed to indifference curves) specify cardinal
measures of output. For example, isoquant I might refer to 60 units of physical output; isoquant II to 100 units of output, etc.
Fig. 6-3