Final answer:
The key concept deduced from a graph displaying isoquants in the (l, k) space is the firm's production function, illustrating the rate of substitutability between labor and capital to maintain a consistent output level.
Step-by-step explanation:
In a graph displaying isoquants in the (l, k) space, the key concept that can be deduced is the rate at which one input can substitute for another while keeping the output level constant. Isoquants are contour lines that represent different combinations of labor (l) and capital (k) that produce the same level of output in production theory. As we look at such a graph, the slope of an isoquant represents the marginal rate of technical substitution (MRTS), which illustrates the trade-off between labor and capital. When an isoquant is closer to the origin, it indicates a lower level of output, while the isoquants farther from the origin indicate higher levels of output. Therefore, the key concept we can infer from the isoquant is the firm's technology or production function, which represents how a firm can combine inputs to produce output.