Answer to Question #52112 in Microeconomics for Asif

Question

Use the production function Q = 25K^0.5L^0.5 to derive a number of input combinations on the 100-unit isoquant. Then, plot these points in a graph.

Answer 1

Production function Q = 25K^0.5L^0.5. An isoquant is a contour line drawn through the set of points at which the same quantity of output is produced while changing the quantities of two or more inputs. While an indifference curve mapping helps to solve the utility-maximizing problem of consumers, the isoquant mapping deals with the cost-minimization problem of producers. Isoquants are typically drawn along with isocost curves in capital-labor graphs, showing the technological tradeoff between capital and labor in theproduction function, and the decreasing marginal returns of both inputs. Adding one input while holding the other constant eventually leads to decreasing marginal output, and this is reflected in the shape of the isoquant. A family of isoquants can be represented by anisoquant map, a graph combining a number of isoquants, each representing a different quantity of output. Isoquants are also called equal product curves.