(8th edition) (the pearson series in economics) robert pindyck, daniel rubinfeld microecon 245

220 PART 2 • Producers, Consumers, and Competitive Markets

Capital
per
year

A

F IGURE 6.7

ISOQUANTS WHEN INPUTS ARE
PERFECT SUBSTITUTES
When the isoquants are straight lines, the MRTS is
constant. Thus the rate at which capital and labor
can be substituted for each other is the same no
matter what level of inputs is being used. Points
A, B, and C represent three different capital-labor
combinations that generate the same output q3.

B

C
q1

q2

q3
Labor per year

it is impossible to make any substitution among inputs. Each level of output
requires a specific combination of labor and capital: Additional output cannot be

obtained unless more capital and labor are added in specific proportions. As a
result, the isoquants are L-shaped, just as indifference curves are L-shaped when
two goods are perfect complements. An example is the reconstruction of concrete sidewalks using jackhammers. It takes one person to use a jackhammer—
neither two people and one jackhammer nor one person and two jackhammers
will increase production. As another example, suppose that a cereal company
offers a new breakfast cereal, Nutty Oat Crunch, whose two inputs, not surprisingly, are oats and nuts. The secret formula for the cereal requires exactly one

Capital
per
year

F IGURE 6.8

q3

C

FIXED-PROPORTIONS PRODUCTION FUNCTION
When the isoquants are L-shaped, only one combination
of labor and capital can be used to produce a given output
(as at point A on isoquant q1, point B on isoquant q2, and
point C on isoquant q3). Adding more labor alone does
not increase output, nor does adding more capital alone.

q2

B
K1

A

L1

q1

Labor per year