What are some examples of the types of isoquants? by Desmond Last
Answer by Desmond Last:
There are illustration of Isoquant curves all over the Internet so there is little point in just copying one for the answer. So I have illustrated the answer with real examples giving climate change as a factor to least-cost inputs.
Production cost is always a rapidly changing variable for companies. The option to produce the same output whilst being able to least-cost the production inputs is necessary if the production system is to maintain profitability and production efficiency.
Production companies have to ensure supply chain reliability and yet at the same time maintain the cost-structure which does not require an increase in least-cost price,
I am constantly surprised how little notice industry has taken of climate change as a factor in their isoquant curves and least-cost calculations.
For example how is the Mini-Cooper production system in the U.K owned by BMW and its inputs car component and labor to the production isoquant be affected by climate change?
We all know that car manufactures have only developed the minimum to reduce greenhouse emissions ie carbon dioxide and their own production emissions and the use of materials to reduce resource gathering emissions.
Obviously corporate Governance has no effect on the Management isoquant when its is faced with least-cost labor and China’s Pollution.
Car manufactures are quite happy to reduce labor costs by moving production to China even though China’s response to Climate Change has been pathetic.
Mini-Cooper has a supply chain from all over the world. It uses ‘just in time’ least cost methods to ensure the production line is fed with components 4/7. This requires a reliable and least-cost method and agreement of supply.
How can Mini-Cooper guarantee that supply-chain integrity when it can no longer rely on predictable weather? How long before Mini-Cooper moves away from least-cost to most reliable supply – which are not always the same and no longer least-cost.
This will also begin to have an effect on the profit curve in the isoquant and marginal profitablity. The difference between closing down Mini-Cooper and not, is the sale of one car – the point at which the profit curve of the isoquant flattens out and is intersected by the curves of capital supply and cost.
Once the production line is stopped because workers can no longer assemble then the workforce – the other input to the isoquant will also be affected. Workers may go on short-time work or be laid-off.
It also may affect the share price and profitability of Mini-Cooper which is another input to the Production isoquant – Capital.
The U.K is an island that will be one of the most affected countries in the world by Climate Change. Its own isoquant – the productive output of the U.K will be affected by the supply curve as will another of its isoqaunt curves – exports.
Will the decision to locate production in the U.K be affected by what happen in Cumbria and other parts of the U.K- the floods?
The Carrs Table Water Company lost 2–3 months of Production in 2016 because the floods in Carlisle had damaged their production system – one of the inputs.
David Cameron and the UKGOV have never responded to any of my new ideas and systems or even acknowledged me. They are prepared to put at risk the production inputs to the UK – an isoquant that has inputs which will be affected by climate change. There is nothing least cost in the way they have ignored me and my ideas that they do not have.