Free

# Isocost-Isoquant - Assignment Example

Summary
In the above Isocost-Isoquant it can be observed that as one move from the left to the right the marginal returns using the same ratio of labour and capital gradually decreases. …

## Extract of sample "Isocost-Isoquant"

ECO3101: Homework Set #3 Section Production MPC Capital 90,000 80,000 70,000 60,000 50,000
40,000
30,000
20,000
10,000 L1 L2 L3 L4 L5 Labour (MPL)
Source: Author
In the above Isocost-Isoquant it can be observed that as one move from the left to the right the marginal returns using the same ratio of labour and capital gradually decreases. At point L1, the amount of capital used is very high while the labour is low. Similarly, at point L5 the amount of capital is lowest while the level of labour is highest. The optimum profit maximisation level in the isoquant-isocost graph is point L4, which is 50,000 capitals, and 96 labourers (Oyer, 2006).
Section 2: Perfect Competition
Given that the MC=2 + 4 and = 2 + 2, the total cost may be obtained by integrating the MC. T.C=2Q+2Q2
Fixed cost= T.C-A.V.C
F.C= (2Q+2Q2)-(2 + 2 Read More
Cite this document
• APA
• MLA
• CHICAGO
(“Isocost-Isoquant Assignment Example | Topics and Well Written Essays - 500 words”, n.d.)
Isocost-Isoquant Assignment Example | Topics and Well Written Essays - 500 words. Retrieved from https://studentshare.org/macro-microeconomics/1701555-isocost-isoquant
(Isocost-Isoquant Assignment Example | Topics and Well Written Essays - 500 Words)
Isocost-Isoquant Assignment Example | Topics and Well Written Essays - 500 Words. https://studentshare.org/macro-microeconomics/1701555-isocost-isoquant.
“Isocost-Isoquant Assignment Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/macro-microeconomics/1701555-isocost-isoquant.
Click to create a comment or rate a document

## CHECK THESE SAMPLES OF Isocost-Isoquant

### Explanation of the graphics figures upon budget

...of the square. The isocost line (the dotted diagonal) is also tangent to the two isoquants at this point. Observe that producer 1’s equilibrium input choice of labour x=x1=x2=producer 2’s equilibrium choice of input x and similarly the equilibrium choices of energy y1=y2. It has also been assumed that the two isoquants correspond to the same levels of output q1=q2=q. Part (ii) Figure 8: If the budget remains unchanged,then the production set for both firms shrinks In figure 8 above, we first show the impact that the changed relative input prices has on the production set if the total resources of the firms stays the same. The increase in the price of electricity resulting from the carbon...
7 Pages(1750 words)Assignment

### Demand and Price

...of biofuels have to substitute the input of the two raw materials for the optimization of profits. Thus, the producer faces the choices to incur a higher cost of production, reduce the output or increase the consumption of oilseed for production. The crop farmer benefits from higher returns and responds by increasing the production of corn (Dalton, 2009). The vertical axis shows the input of oilseed while the horizontal shows the corn input. The aim of the producing company is to maximize profit (Dalton, 2009). The point R we have the isocost line meeting with the isoquant. This combination of corn and oilseed will yield the company maximum output minimizing on cost which is the objective of the company....
6 Pages(1500 words)Essay

### Micro economic assignment

...Micro economic assignment Part A Your first task is to use models and concepts relating to producer behavior to analyze the effects of increased demand for bio-fuels on the inputs to its production (including crops, such as corn). i. Analyze the impacts of increased demand for biofuels on the demand for and price of crops such as corn. Figure 1: Isoquant Isocost Analysis for the Production of Biofuels From other raw materials and plant matter, liquid fuels referred to as biofuels can be produced. From the Isocost Isoquant analysis graph above, we assume that corn (C) and Oil (O) are utilized in the production of biofuels (B). Therefore, the production function for...
6 Pages(1500 words)Assignment

### Western Australia economy

...market is expected to remain constant or even increase in the coming 15 years, the only concern for Australian market is to bank upon the amount of production5. The theory of isoquants and isocosts is applicable for this Australian scenario regarding the production of the optimum quality pertaining to the prevailing demand in the Asian market. A clearer prospect of the theories can be evolved after explanation of the input requirements in the commodity production with reference to the input demand and prices. The most important inputs for production of iron-ore in Australia are capital and labor. As the concern for the Australian market is to produce maximum amount of iron ore through finding the optimum...
8 Pages(2000 words)Essay

### Economic

...will persist to develop more quickly than the ability of the state to supply. This demand will have to be met by the government from the states’ natural population or from the present migration plans. iii It is estimated that a whopping additional 224,000 workers will be needed by 2016 in Western Australia. iv This will result in demand for training people, housing requirements will be more, and there will be the need for drastic growth in infrastructure as well. The demand for production with reference to Isoquant and Isocosts curve theory The principle of substitution discloses a basic theory of neoclassical location theory. Without a doubt, it may be debated that in a neoclassic site, the position of...
6 Pages(1500 words)Essay

### Assignment on Microeconomics 5 questions (350 words to each question)

...Qo Quantity If a tax is imposed, the price rises from P0 to P1, now due to the inelastic demand the quantity demanded Qo does not change. On spending, consumers spend more on cigarettes because the quantity consumed does not change and our price has increased Question 4 Isoquant curve - it is also called an isoproduct curve. It is a contour line, which joins together the different combinations of the two factors of production, namely capital and labor that are just physically able to produce a given quantity of a particular good. Isocost line - illustrates all the combinations of capital and labor that can be bought for a given monetary...
7 Pages(1750 words)Essay

### Economics

.... These isocost lines are parallel because each reflects the same relative resource price. Isoquant Given a production function, an isoquant is "the locus of input combinations that yield the same output level." (Chiang, p. 360) There is an isoquant set for each possible output level. Mathematically the isoquant is a level curve of the production function. Isoquants is a concept relating to the quantity of input required to produce a certain level of output. For a given level of output, there are certain levels of input of production factors that yield the same level of output. If the ratio of two or more of the factors of production is changed then the resulting yield of those input factors can be same for all of the combinations... ...
6 Pages(1500 words)Essay

### Exam - MANAGERIAL ECONOMICS

.... Question A6: Second degree of price discrimination occurs when firms decide to sell goods that they deem as surplus at relatively low prices. Question A7: The law diminishing returns states that if one factor of production is increased while the others remain constant, the overall returns will relatively decrease after a certain point Question A8: Isocost line shows all combinations of inputs which cost the same total amount. The isocost line pertains to cost-minimization in production. Question A9: A monopoly firm has the following four characteristics: The firm has complete control of the market. The firm has unique products. There is restriction to entry into the market by potential producers. The...
4 Pages(1000 words)Term Paper

### Discussion

...Macro & Microeconomics al Affiliation) The Firm If a firm, wants to maximize its profit it must choose its inputs effectively to minimize the cost of production. Its choice of production output depends on the environment in which it operates. However, whatever the firms production output, the factors of inputs must be chosen to minimize the cost of production. Isocost line indicates combinations of all inputs resources whose cost is the same total amount, while an isoquant is a curve, which shows various combinations of capital and labor. The use of the isocost line pertains to minimization of cost in production of the firm. For the cost minimization situation of the firm is to choose a combination of input resources suitable... for the...
1 Pages(250 words)Coursework

### The Responses Russia And India to the Global Financial Crisis

6 Pages(1500 words)Assignment