ABSTRACT
Isoquants represent efficient combinations of inputs to produce a given level of output. Underlying the isoquant is a given technology. It may be that as we increase output different technologies become available, so that the efficient combinations can change with volume of service. In the health sector this is particularly apparent in pathology, where automated systems may only be efficient if large volumes of samples are tested. Many technologies are ‘lumpy’, that is to say, machines only come in certain sizes, so that they may only be efficient in use if at least a minimum volume of service is provided. The isoquant map tells us about the behaviour of the technology in any particular case. Changing slopes mean that the relative productivity of different factors changes, and increasing or decreasing returns to scale are reflected in changes in the gaps between isoquants. However, in choosing the lowest cost combination of inputs to use in production we need to remain aware also of any changes in the relative price of inputs.
