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    The Law of Variable Proportions or Returns To A Factor

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    Manthan Ashutosh Mehta
    The document outlines the law of variable proportions, which describes the relationship between a variable input factor and total output when all other factors are held fixed. It states that as the variable factor increases initially, marginal production and total production increase. However, at a certain point, marginal production begins to decline, leading to stages of diminishing and eventually negative returns. The law of variable proportions assumes a fixed technology and analyzes production in the short run when some inputs are variable and others fixed.

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    The Law of Variable Proportions or Returns To A Factor

    Uploaded by

    Manthan Ashutosh Mehta
    18 views2 pages
    The document outlines the law of variable proportions, which describes the relationship between a variable input factor and total output when all other factors are held fixed. It states that as the variable factor increases initially, marginal production and total production increase. However, at a certain point, marginal production begins to decline, leading to stages of diminishing and eventually negative returns. The law of variable proportions assumes a fixed technology and analyzes production in the short run when some inputs are variable and others fixed.

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    Economic law

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    The Law of Variable Proportions or Returns to a Factor

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    The document outlines the law of variable proportions, which describes the relationship between a variable input factor and total output when all other factors are held fixed. It states that as the variable factor increases initially, marginal production and total production increase. However, at a certain point, marginal production begins to decline, leading to stages of diminishing and eventually negative returns. The law of variable proportions assumes a fixed technology and analyzes production in the short run when some inputs are variable and others fixed.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    18 views2 pages

    The Law of Variable Proportions or Returns To A Factor

    Uploaded by

    Manthan Ashutosh Mehta
    The document outlines the law of variable proportions, which describes the relationship between a variable input factor and total output when all other factors are held fixed. It states that as the variable factor increases initially, marginal production and total production increase. However, at a certain point, marginal production begins to decline, leading to stages of diminishing and eventually negative returns. The law of variable proportions assumes a fixed technology and analyzes production in the short run when some inputs are variable and others fixed.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    THE LAW OF VARIABLE PROPORTIONS OR RETURNS TO A FACTOR

    ASSUMPTIONS

     The technique of production does not change/state of technology is


    constant.
     For production only.
     All units of variable factor are equally efficient.
     There must be some inputs whose quantity is kept fixed.
     Variable factors are combined with fixed factors.
     For short run and factors are fixed and variable.

    MEANING
     The law of variable proportions refers the relationship between
    variable factor (keeping all other factors as constant) and output.
     It stated that with the increase in a variable factor keeping others
    factors constant, initially the marginal production rises but after
    reaching a certain point of employment, it starts declining.

    STAGES OF LAW

    Stage 1 -:

     In this stage TP increasing at a increasing rate and MP also


    increase. It is called stage of increasing returns.

    Stage 2 -:
     In this stage TP continues to increase but at diminishing rate and
    MP diminishing but remains positive. It is called stage of
    diminishing returns.

    Stage 3 -:

     In this stage TP starts decreasing and MP decreases and become


    negative. It is called stage of negative returns.

    FIXED FACTORS VARIABLE TP MP


    FACTORS
    1 0 0 0
    1 1 10 10
    1 2 30 20
    1 3 45 15
    1 4 52 7
    1 5 52 0
    1 6 48 -4

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