4. Explain the law of variable proportions with the help of a diagram.
(ISC 2005, 20
finlain the law of variable proportions with the help of total product and
Answers
Answer:
The Law of Variable Proportions or Returns to a Factor plays an important role in the study of the Theory of Production. In this article, we will look at the meaning, explanation, stages, significance, and reasons behind the operation of the Law of Variable Proportions.
Explanation:
Law of Variable Proportions or Returns to a Factor
This law exhibits the short-run production functions in which one factor varies while the others are fixed.
Also, when you obtain extra output on applying an extra unit of the input, then this output is either equal to or less than the output that you obtain from the previous unit.
The Law of Variable Proportions concerns itself with the way the output changes when you increase the number of units of a variable factor. Hence, it refers to the effect of the changing factor-ratio on the output.
law of variable proportions
In other words, the law exhibits the relationship between the units of a variable factor and the amount of output in the short-term. This is assuming that all other factors are constant. This relationship is also called returns to a variable factor.
The law states that keeping other factors constant, when you increase the variable factor, then the total product initially increases at an increases rate, then increases at a diminishing rate, and eventually starts declining.