Question 1 of 31intermediate🔧 ApplyShort Answer3 marks

Can you identify the sets of inputs that will lie on the isoquant q=50q = 50?

Correct Answer

An isoquant is the set of all possible combinations of two inputs that yield the same maximum possible level of output. From Table 3.1 in the context, we can identify the input combinations that produce an output of 50 units.

Looking at the production function table, the output of 50 units is produced by the following combinations of Labour (L) and Capital (K):

  1. (3L, 6K) – 3 units of labour and 6 units of capital
  2. (4L, 4K) – 4 units of labour and 4 units of capital
  3. (6L, 3K) – 6 units of labour and 3 units of capital

All these three combinations lie on the same isoquant representing the output level q = 50. Just as the example in the text shows that output of 10 units can be produced in 3 ways (4L, 1K), (2L, 2K), (1L, 4K), similarly these three combinations produce the same output level of 50 units.

Exercise: Isoquant | Q: 1 | (Page 3)
For More Understanding

Explanation

The question tests understanding of isoquants and the ability to read a production function table. An isoquant represents all input combinations that produce the same level of output. From Table 3.1, students need to locate all cells where the output value equals 50. The table clearly shows that output = 50 occurs at three positions: (L=3, K=6), (L=4, K=4), and (L=6, K=3). This demonstrates the concept that isoquants show input substitutability - the same output can be achieved using different combinations of labour and capital.

Solution Steps

  1. Step 1: Understand that an isoquant represents all input combinations yielding the same output level.

  2. Step 2: Refer to Table 3.1 showing the production function with Labour on rows and Capital on columns.

  3. Step 3: Identify all cells in the table where output = 50.

  4. Step 4: Read the corresponding Labour and Capital values for each such cell.

  5. Step 5: List the combinations: (3L, 6K), (4L, 4K), and (6L, 3K).

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