Question 22: A kinked iso-quant indicates, O Limited substitutability of factors O Continuous substitutability of factors Perfect substitutability of factors O Zero substitutability of factors
Answers
Answer:
ypes of Iso-quant Curves
The iso-quant curves can be classified on the basis of the substitutability of factors of production. These are:
types of iso-quant curve
Linear Iso-quant Curve: This curve shows the perfect substitutability between the factors of production. This means that any quantity can be produced either employing only capital or only labor or through “n” number of combinations between these two.linear iso-quant curve
Right Angle Iso-quant Curve: This is one of the types of iso-quant curves, where there is a strict complementarity with no substitution between the factors of production. According to this, there is only one method of production to produce any one commodity. This curve is also known as Leontief Iso-quant, input-output isoquant and is a right angled curve.right angle iso-quant curve
Kinked iso-quant Curve: This curve assumes, that there is a limited substitutability between the factors of production. This shows that substitution of factors can be seen at the kinks since there are a few processes to produce any one commodity. Kinked iso-quant curve is also known as activity analysis programming iso-quant or linear programming iso-quant.Kinked Iso-quant curve
Convex Iso-quant Curve: In this types of iso-quant curves, the factors can be substituted for each other but up to a certain extent. This curve is smooth and convex to the origin.convex iso-quant curve
Explanation:
Answer:
The kinked iso-quant theory states that when the costs of substituting one factor for another become too high, producers will be unable to substitute the factors and will have to rely on the same combination of factors of production.
Explanation:
From the above question,
They have given :
A kinked iso-quant indicates, O Limited substitutability of factors O Continuous substitutability of factors Perfect substitutability of factors O Zero substitutability of factors
The kinked iso-quant theory is a theory in economics which suggests that when a producer is trying to maximize profits, they will substitute factors of production up to a certain point at which the substitution process becomes more difficult, resulting in a kink in the iso-quant line. This theory states that when the costs of substituting one factor for another become too high, producers will be unable to substitute the factors and will have to rely on the same combination of factors of production.
The kinked iso-quant theory suggests that when a producer is trying to maximize profits, they will substitute factors of production up to a certain point at which the substitution process becomes more difficult. This point is referred to as the kink in the iso-quant line.
The kinked iso-quant theory states that when the costs of substituting one factor for another become too high, producers will be unable to substitute the factors and will have to rely on the same combination of factors of production.
This indicates that the factors of production are not perfectly or continuously substitutable, but that there is a limit to the substitution process. This limit is what creates the kink in the iso-quant line and illustrates that there is a limited amount of substitutability between factors of production.
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