What is the Importance of Ridge Line in Production? – Explained
So a’ employs more of both the inputs than point ‘a’ even though those two points represent the same level of output. Thus, point a’ is inferior to point ‘a’. No only for point a’, it is true for all the points lying above point ‘a’ on isoquant IQ1.
Similarly, by comparing p and p’, it can also be established that all the points right to ‘p’ are inefficient because they require more of both the inputs in order to produce the same level of output. Thus, points in the range of ‘a’ to ‘p’ on IQ1 are economically feasible. For IQ3 and IQ2, feasible combinations lie between ‘b’ to ‘q’ and ‘c’ to ‘r’ respectively.
The line that connects upper boundary points of isoqunts (i.e., a, b and c) is called upper ridge line and the line that joins lower boundary points of isoquants (i.e., p, q and r) is called lower ridge line. The region above the upper ridge line ‘Oabc’ and below the lower ridge line ‘Opqr’ are economically inefficient as compared to the area within the two ridge lines, i.e. ‘cbaOpqr’.