Explain with diagram the 3 stages of production. why does law of diminishing returns operate? in hindi
Answers
Answer:
The law of variable proportions is a new name for the law of diminishing returns, a concept of classical economics. But before getting on with the law, there is a need to understand the total product (TP), marginal product (MP) and average product (AP).
Total Product: Total product is the total output obtained from the combined efforts of all the factors of production. Further, if we wish to find the effect of one factor of production, say labour, on the total product, we need to keep all the other factors constant. In this case, the total product would vary with the factor kept variable.
Marginal Product: The change in the total product when one more unit is added to the variable factor is known as the marginal product.
Average Product: Average product is the total product per unit of the variable factor. In other words, it is the ratio of total product to the quantity of variable factor.