Re: isi prep

Posted by Hargun on Jul 05, 2012; 6:12pm
URL: http://discussion-forum.276.s1.nabble.com/isi-prep-tp7578993p7579195.html

well, first plot isoquants of both plants for one unit output separatly on same graph. now these two will cross. the portion of the isoquant (where equation is z1=3) represents production in plant two only, because it produces one unit while plant one would have produced less. (similarly for portion z2=2, where plant one is used). this should explain why these two portions figure in the isoquant eqn with a union sign. next you can join the two points of the two isoquants where they are kinked. on all these input combinations both plants produce. try to find a random point on this portion and draw both plants' isoquants which pass through this point. you'l get the respective output quantities produced... i think.