Figure 8A-2 An Isoquant Map
To understand the convexity of the isoquant, consider what happens as
the firm moves along the isoquant of Figure 8A-1 downward and to the
right. Labour is being added and capital reduced to keep output constant.
If labour is added in increments of exactly 1 unit, how much capital can
be dispensed with each time? The key to the answer is that both factors
are assumed to be subject to the law of diminishing marginal returns.
Thus, the gain in output associated with each additional unit of labour
added is diminishing, whereas the loss of output associated with each
additional unit of capital forgone is increasing. Therefore, it takes ever-
smaller reductions in capital to compensate for equal increases in labour.
Viewed from the origin, therefore, the isoquant is convex.
An Isoquant Map
The isoquant of Figure 8A-1 is for a given level of output. Suppose it is
for 6 units. In this case, there is another isoquant for 7 units, another for
7000 units, and a different one for every other level of output. Each
isoquant refers to a specific level of output and connects combinations of
factors that are technically efficient methods of producing that output. If
we plot a representative set of these isoquants from the same production
function on a single graph, we get an isoquant map like that in Figure
2. The higher the level of output along a particular isoquant, the farther
the isoquant is from the origin.