Study the figure below. Labour is on the X-axis and capital on the Y-axis. Points A and B lie on the isoquant IQ1, and point C lies on the isoquant IQ2.
Which of the following is correct?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → A and B give equal output; C gives more output than B.
A and B lie on the same isoquant, IQ1, so they give equal output. C uses the same capital as B but more labour, which takes the firm to the higher isoquant IQ2. So C gives more output than B.
More capital at A is made up for by less labour, which is why A and B can give the same output.
NCERT (2026-27): “Isoquant … The diagram here generalizes this concept. We place L on the X axis and K on the Y axis. We have three isoquants for the three output levels, namely q = q1, q = q2 and q = q3. Two input combinations (L1, K2) and (L2, K1) give us the same level of output q1. If we fix capital at K1 and increase labour to L3, output increases and we reach a higher isoquant, q = q2. When marginal products are positive, with greater amount of one input, the same level of output can be produced only using lesser amount of the other. Therefore, isoquants are negatively sloped.”
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