isoquant

Definitions

Economics

Health Economics

  • (written as Isoquant)
    A contour in a two- input diagram showing the lowest combinations of the two necessary in order to produce a given rate of output. Being 'on' an isoquant implies that the organization in question is technically efficient. Selecting an appropriate point on the isoquant will produce cost-- effectiveness (the opportunity cost of producing that rate of output will be minimized). To achieve this one needs to know the prices (ideally the marginal opportunity costs) of the two inputs. The cost-minimizing combination of inputs at each rate of output is where the isoquant for that output rate is tangential to an isocost line. Selecting the appropriate isoquant (and, of course, the appropriate point on it) will produce general efficiency in the sense of marginal cost = marginal value. To achieve this one needs to know the marginal social value of the output in question.
  • synonymIsoproduct Curve
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