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Isoquant Isocost Approach in Microeconomics Assignment

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Isoquant Isocost Approach in Microeconomics Assignment

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  1. IsoquantIsocostApproach in Microeconomics Assignment

  2. Isocost Curves • Isocost curves consists of the combinations in two input factors. The outcome has been total cost. This is a point where  isocost line has been tangent to  isoquant showing minimum cost combination in two factors for creating the particular output.

  3. Isoquant and Isocost • The isoquant indicates different factors which create the particular output. The isocostindicate the combination in factors which cost similar amount. There are isoquants and Isocostsindicating right combination of the factors connected with production to create the highest output at the least cost.

  4. Producers and Manufacturers on Isoquant and Isocost • The producers along with manufacturers used them. They show the perfect interplayof 2 factors which is going to create the highest output at the least cost. There is an isoquant indicating the combination of factors which create a particular output. The isocost indicate the combination of the factors which is going to cost similar amount.

  5. IsocostLine • In the field of economics, there is isocost line indicating combination in the input which is going to create the amount in total. This creates the top level of the output which could be created for cost of inputs. The line connecting the tangency points on the isoquants along with isocosts has been known as the expansion path.

  6. Forms of Iso-Quant Curves • Linear Iso-quant Curve includes the curve indicating the right substitutability between factors of the production. • Right Angle Iso-quant Curve has been a form of the iso-quant curves. We have a strict complementarity showing lack of substitution between production factors.

  7. Condition of Isocost Line • The important condition indicates slope of  isocost line which is equivalent to slope of isoquant. In equilibrium position, the marginal physical productivities in two factors show equal to ratio in the prices. Marginal physical product for every rupee of a particular factor has been equal to other factor.

  8. Right-angleIsoquants • There is a straight-line along with the right-angleisoquants showing the extreme scenarios indicating the inputs having the right substitutes along with the right complements. As the two inputs have been the right substitutes, the isoquantshave been the straight line. They possess the constant slope and the reason is that a particular input could be substituted with other at same speed.

  9. Method of Searching Slope of Isocost Curve • Slope of a particular line indicates -w/r = the negative of factor price ratio. There is a line which will not change. The team can find different factors creating the quantity at lowest total cost. We have threeisocost lines.

  10. Kinked Isoquant • It shows the isoquant having different combinations of labor and capital. There are combinations could be utilized in processes of the production. There is a particular proportion. When we observe the machines, there is a mixture of the labor used and capital employed has been different.

  11. Cost of Production and Influence over Slope of Isoquant • There is a cost of producing particular output improving by similar percentage as  input prices. When a particular input price improves, on the other hand, there are othershaving same, then we observe the slope of isoquant changes. When the input price  increases, for instance, there is a slope in isocost line increases.

  12. NonconvexIsoquant • The nonconvexisoquanthas been going to create significant change. This is a discontinous change in price reducing input mix in the response to the changes in price. For instance, there is a case where isoquant has been nonconvexglobally. There is linear status of the isocost curve.

  13. Cost Mix of The Inputs • For this situation, cost mix of the inputs is going to be the final solution. There is one input. The choice of input to utilize relies on relative prices. For a particular critical price ratio, the mix of optimum input will move from input A to input B and also in the reverse direction. There is a response for the tiny change in the different relative prices.

  14. Contour Line of Isoquant • The contour line of isoquant shows the combination of the two inputs has been improving the utilization of resources like time or budget. There is a total maximisationof the resources has been regarded as efficient.

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