Production with Two Variable Inputs ( L, K) Capital per year 5 E The Isoquant Map 4 The isoquants are derived from the production 3 function for output of A B of55,75,and90 2 Q2=90 3 Q2=75 Q=55 2 3 4 5 Labor per year Chapter 6 Slide 11
Chapter 6 Slide 11 Production with Two Variable Inputs (L,K) Labor per year 1 2 3 4 1 2 3 4 5 5 Q1 = 55 The isoquants are derived from the production function for output of A of 55, 75, and 90. D B Q2 = 75 Q3 = 90 C E Capital per year The Isoquant Map
Isoquants Input Flexibility a The isoquants emphasize how different input combinations can be used to produce the same output a This information allows the producer to respond efficiently to changes in the markets for inputs Chapter 6 Slide 12
Chapter 6 Slide 12 Isoquants ◼ The isoquants emphasize how different input combinations can be used to produce the same output. ◼ This information allows the producer to respond efficiently to changes in the markets for inputs. Input Flexibility
Isoquants The Short Run versus the Long Run a Short-run o Period of time in which quantities of one or more production factors cannot be changed o These inputs are called fixed inputs Chapter 6 Slide 13
Chapter 6 Slide 13 Isoquants ◼ Short-run: ⚫ Period of time in which quantities of one or more production factors cannot be changed. ⚫ These inputs are called fixed inputs. The Short Run versus the Long Run
Isoquants The Short Run versus the Long Run ■Long-run o Amount of time needed to make all production inputs variable Chapter 6 Slide 14
Chapter 6 Slide 14 Isoquants ◼ Long-run ⚫ Amount of time needed to make all production inputs variable. The Short Run versus the Long Run
Production with One Variable Input (Labor) Amount Amount Tota Average Marginal of Labor(L of Capital (K Output(Q) Product Product 0 10 0 10 10 10 10 30 15 20 10 60 20 30 23456789 10 80 20 20 10 95 15 10 108 18 13 10 112 10 112 14 0 10 108 12 10 10 100 8 Chapter 6 Slide 15
Chapter 6 Slide 15 Amount Amount Total Average Marginal of Labor (L) of Capital (K) Output (Q) Product Product Production with One Variable Input (Labor) 0 10 0 --- --- 1 10 10 10 10 2 10 30 15 20 3 10 60 20 30 4 10 80 20 20 5 10 95 19 15 6 10 108 18 13 7 10 112 16 4 8 10 112 14 0 9 10 108 12 -4 10 10 100 10 -8