A n isoquant represents all those combinations of inputs, which are capable of producing the same level of output.

Isoquants are aiso called equal-product or iso-produci or iso-product curves. P Since an equal-product curve
represents all those combination of inputs, which yield an equal quantity of output, the producer is indifferent between
them. Therefore, another name for an isoquant is production-indifference curve. The concept of isoquant can be
easily understood with the help of the following schedule.
Various combination of X and Y to produce a given level of output
Factor Combination Factor X Factor Y
A 1 12
B 2 08
C 3 05
D 4 03
E 5 02

Each of the factor combinations A, B, C, D, and E represents the same level of production, say 100 units. When we
plot them we get a curve IQ as shown in figure
Iso-Cost or Equal-Cost Lines: Iso-cost line represents the prices of factors. It shows various combinations of two factors,
which the firm can with, given outlay. Suppose a firm has Rs. 1,000 to spend on the two factors X and Y. If the price of
factor X is Rs. 10 and that of Y is Rs. 20, the firm can spend its outlay on X and Y in various ways. It can spend the
entire outlay on Y and buy 50 units of it with zero units of Y or it can spend the entire outlay on Y and buy 50 units of it
with zero units of X factor. In between, it can have any combination of X and Y.

We can show iso-cost line diagrammatically also. The X-axis shows the units of factor X and Y-axis the units of factor Y.
When entire Rs. 1,000 is spent on factor X we get OB and when entire amount is spent on factor Y wa get OA. The
straight line AB which joins points A and B will pass through all combinations of factors X and Y which the firms can buy
with outlay of Rs. 1,000. The line AB is called Iso-cost line.

Formula of Slope of Iso-cost Line

Figure shows varous iso-cost lines representing different combinations of factors with different outlays.
The east combination of factors can be found by super-imposing iso-quant on iso-cost lines. This is shown in figure
aside.
Suppose the firm has decided to produce 1,000 units (represented by iso-quant P). These units can be produced by any
factor combination lying on P such as A, B, C, D, E etc. The cost of producing 1,000 units would be minimum at the
factor combination represented by point C where the iso-cost line MM1 is tangent to the given iso-quant P. At all other
points such as A, B, D, E the cost is more as these points lie on higher iso-cost lines than MM1. Thus, the factor
combination represented by point C is the optimum combination for the producer. It represents the least-cost of
producing 1,000 units of output It ts thus dear that the tangency point of the given iso- quant with an iso-cost line
represents the least cost combination of factors for producing a given output.

Assumptions of isoquants
Isoquant analysis is normally based on the following assumptions:
1) It is generally assumed that there are only two factors or inputs of production. This makes the geometric exhibition of
the concept easy since we can easily draw a diagram. If we abandon this assumption and consider four or five
factors of production (in keeping with the reality) we would not be able to make use of the diagrammatic
representation and would have to resort to the algebraic method.
2) The second assumption of the isoquant analysis is that the factors of production are divisible into small units and can
be used in various proportions.
3) Technical conditions of production are given and it is not possible to change them at any point of time.
4) Given the technical conditions of production, different factors of production are used in the most efficient way. !f this
assumption is abandoned, then any one combination of the factors of production will yield a number of different
levels of production of which the highest level obtained would be efficient (and all Ic./er levels of production
inefficient).
 Properties of Isoquants
1) isoquants are Negatively Sloped: Normally isoquants slope downwards from left to right implying that they are
negatively sloped. The reason for this characteristic of the isoquant is that when the quantity of one factor is reduced,
the same level of output can be achieved only when the quantity of the other is increased.
2) A Higher Isoquant Represents a Larger Output: A higher isoquant is one that is further from the point of origin. It
represents a larger output that is obtained by using either the same amount of one factor and the greater amount of
him other factor or the greater amounts of both the factors.
3) No Two Isoquants intersect or Touch Each Other: isoquants do not intersect or touch each other . because they
represent different levels of output.
4) isoquants are Convex to the Origin: In most production processes the factors of production have substitutability. Often
labor can be substituted for capital and vice versa. However, the rate at which one factor of production is substituted
for the other in a production process, that is, the marginal rate of technical substitution (MRTS) often tends to fall.