11. State the phases of the law of variable proportions in terms of total
physical product. Use diagram.
Answers
Explanation:
The Law of Variable Proportions states that if more and more of variable factors (labour) is combined, with the same quantity of fixed factor (capital), then initially the total product will increase but gradually after a point, the total product will decrease. In order to understand the laws and how they operate let us analyse the following schedule and the figure :
The whole production phase can be distinguished into three different production stages : I Stage-Increasing Return to a Factor: This stages starts from the origin point O and continues till the point of i; inflexion (K) on the TP curve. During this phase. TP increases at an increasing rate. II Stage-Diminishing returns to a Factor: This stage starts from point K and continues till point B on the TP curve. During this stage, the TP increases but ai a decreasing rate and attains its maximum point at B, where it remains constant. III Stage- Negative Returns to a Factor: This stage begins from the point B on the TP curve. Throughout this point. TP curve is falling.
