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

CHAP. 6] THEORY OF PRODUCTION 137
(b)
A movement down an isoquant (within the ridge lines) corresponds both to a downward movement along a
MP L curve (since we are in stage II, and we are increasing the amount of labor used) and to a downward
shift in the MP L curve (since we are reducing the amount of capital used with each quantity of labor
employed). Thus as we move down an isoquant (within the ridge lines), the value of the MP L falls for both
reasons. We could use the same reasoning to explain why a movement up an isoquant (within the ridge
lines) implies that the MP K is declining.
6.15 Explain how, from an isoquant map, we can derive (a) the TP L and (b) the TP K .(c) What type of
isoquant map is implied by a TP function like the one in Problem 6.10?
(a)
Fixing the amount of capital used at a specific level ( K) and increasing the amount of labor used per unit of
time corresponds to a movement from left to right along the line parallel to and above the horizontal axis in
panel A of the following isoquant map (Fig. 6-17). As we move from left to right along this line, we cross
higher and higher isoquants up to a point. By recording the quantity of labor used (with the fixed amount
of capital) and the corresponding quantities of total output, we can generate the TP L curve shown in panel
B of Fig. 6-17. This brings us back to a short-run analysis. If we fixed the amount of capital used at a different
level, we would get a different TP L curve.
Fig. 6-17
(b)
(c)
We could similarly derive the TP K curve by drawing a vertical line at which the amount of labor is fixed, changing
the amount of capital used per unit of time, and recording the output levels.
A TP curve like the one in Problem 6.10 implies an isoquant map in which isoquants are defined only for their
negatively sloped range.