The slope of isoquant values at a place where the slope of the land is more than about 45 degrees from a horizontal surface is known as the marginal rate of land gain or loss. Irrespective of the type of land, the slopes of land are graded, i.e., some have steeper slopes than others. These slopes are termed as marginal rates. When the slope of land at a place is steeper than 45 degrees, most of the land there is considered to be of marginal rate and the area under this category is known as the isoquant area.
Economic regions refer to the locations beyond a town, village, hamlet, or town and the neighbouring areas. Areas outside the economic region are called remote isoquants. In the economic region, the land is classified as isoquant when it is below the level of slopes. Thus, all the land which does not have the least slope to it, i.e., a gradient of maximum one degree, is known as marginal or upland land. Thus, if we divide the land in two parts and those in the upland region and economic region, we get the following areas:
The area between isoquant and upland for each of the categories above is known as upland area. Based on the relation between the slope of the isoquant and the land mean of each of these categories, the area between the slopes and the mean of each of the slopes is called the isocost of land. The term "isocost line" is used in British English to describe the relationship between the land mean and the no cost line. In the United States, the term "slave" is used to describe the relationship between the slope of the isoquant and the area between the slope of a scamp and the area above the mean of the said slope.
Assuming that the area between the slope of isoquant is zero, then it follows that the quantity of area below the isoquant mean of slope and above the mean of the slope is the same. This quantity is known as the area between the ridgelines. We know that the area between the ridge lines is equal to the area between the slopes of isoquants, therefore, if the area below the slope of isoquant is equal to the area above the slopes of isoquants, then the quantity of area below the ridgelines will be equal to the quantity of area above the slopes of isoquants. Therefore, if we find slope of isoquant, the distance from the ridgelines to the area between them is known as the ridgeline depression.
Technical substitution shows that the quantity of area beneath a mean slope of the isoquant is equal to the area above the mean slope of the same slope. This quantity is called the marginal rate of return. Another term often used in the context of investment in isoquants is the rate at which the returns on the underlying investments are increasing. It is this form of technical analysis that leads to the name Technical Trading. In Technical Trading, a person buys and sells stock depending upon the rise and fall in the value of stocks of a particular company.
The slope of isoquant does not directly impact the values of isocost or mrts but is affected by other terms such as the rate at which investments are increasing and the rate at which investments are decreasing. Technical traders study the patterns of returns and short-term price fluctuations for a certain period of time. When a particular pattern is found, the technical trader will buy and sell shares according to its chances of earning higher returns. The advantage of Technical Trading over other forms of investing is that the analysis of historical data provides more reliable information.
An MPL formula a part of the MRTS in economics, you can read about in detail on thekeepitsimple a blogging website for management students.
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