Difference between Isoquants and Indifference Curves

Difference between Isoquants and Indifference Curves.

An isoquant is similar to an indifference curve in several ways. In it, two factors (capital and labour) replace two commodities of consumption. An isoquant shows equal level of product while an indifference curve shows equal level of satisfaction at all points.

However, there are certain differences between isoquants and indifference curves.

1. Firstly, an indifference curve represents satisfaction which cannot be measured in physical units. In the case of an isoquant the product can be measured in physical units.
2. Secondly, on an indifference map one can only say that a higher indifference curve gives more satisfaction than a lower one, but it cannot be said how much more or less satisfaction is being derived from one indifference curve as compared to the other, whereas one can easily tell by how much output is greater on a higher isoquant in comparison with a lower isoquant.

MBA case study / assignment question on this topic:

Explain how the consumer attains utility maximisation and producer ensures cost minimization with the help of indifference curve and isoquant technique.

studymumbai

StudyMumbai.com is an educational resource for students, parents, and teachers, with special focus on Mumbai. Our staff includes educators with several years of experience. Our mission is to simplify learning and to provide free education. Read more about us.