Definition: The Indifference Curve shows the different combinations of two goods that give equal satisfaction and utility to the consumers. In other words, the indifference curve is the graphical representation of different combinations of goods (generally two), for which the consumers are indifferent, in terms of the overall satisfaction and the utility. Assumptions of … [Read more...] about Indifference Curve

# Economics

## Types of Iso-quant Curves

Definition: An Iso-Quant curve is the geometrical representation of the different combinations of input factors employed to produce the given level of output. Types of Iso-quant Curves The iso-quant curves can be classified on the basis of the substitutability of factors of production. These are: Linear Iso-quant Curve: This curve shows the perfect substitutability … [Read more...] about Types of Iso-quant Curves

## Properties of Iso-quant curve

Definition: An Iso-quant curve shows the different combinations of factors of production Viz. Labor and Capital employed to yield the given level of production. Properties of Iso-quant Curve The iso-quant curve is negatively sloped, which means, in order to have a same level of production, the more use of units of one input factor is to be offset with the lesser … [Read more...] about Properties of Iso-quant curve

## Iso-quant Curve

Definition: An Iso-quant Curve shows all the possible combinations of input factors that yield the same quantity of production. In other words, an iso-quant curve is a geometric representation of the production function, wherein different combinations of labor and capital are employed to have the same level of output. The iso-quant curve is also known as Iso-Product Curve. … [Read more...] about Iso-quant Curve

## Constant Elasticity of Substitution Production Function

Definition: The Constant Elasticity of Substitution Production Function or CES implies, that any change in the input factors, results in the constant change in the output. In CES, the elasticity of substitution is constant and may not necessarily be equal to one or unity. The constant elasticity of substitution production function can be shown algebraically as: Q = A [ α … [Read more...] about Constant Elasticity of Substitution Production Function

## Cobb-Douglas Production Function

Definition: The Cobb-Douglas Production Function, given by Charles W. Cobb and Paul H. Douglas is a linear homogeneous production function, which implies, that the factors of production can be substituted for one another up to a certain extent only. With the proportionate increase in the input factors, the output also increases in the same proportion. Thus, there are … [Read more...] about Cobb-Douglas Production Function

## Linear Homogeneous Production Function

Definition: The Linear Homogeneous Production Function implies that with the proportionate change in all the factors of production, the output also increases in the same proportion. Such as, if the input factors are doubled the output also gets doubled. This is also known as constant returns to a scale. The production function is said to be homogeneous when the elasticity of … [Read more...] about Linear Homogeneous Production Function

## Variable Proportion Production Function

Definition: The Variable Proportion Production Function implies that the ratio in which the factors of production such as labor and capital are used is not fixed, and it is variable. Also, the different combinations of factors can be used to produce the given quantity, thus, one factor can be substituted for the other. In the case of variable proportion production function, … [Read more...] about Variable Proportion Production Function

## Fixed Proportion Production Function

Definition: The Fixed Proportion Production Function, also known as a Leontief Production Function implies that fixed factors of production such as land, labor, raw materials are used to produce a fixed quantity of an output and these production factors cannot be substituted for the other factors. In other words, fixed quantity of inputs is used to produce the fixed quantity … [Read more...] about Fixed Proportion Production Function

## Production Function

Definition: The Production Function shows the relationship between the quantity of output and the different quantities of inputs used in the production process. In other words, it means, the total output produced from the chosen quantity of various inputs. Generally, production is the transformation of raw material into the finished goods. These raw materials are classified … [Read more...] about Production Function