Question

Law of variable proportion is a short-run concept. Do you agree? Answer in 100 words.

Answer 1

Answer:

Firms can increase production in the short run only by increasing the quantity of variable factor and not fixed factor. Due to this, the proportion between fixed and variable factor keeps on changing in the short run and hence the law is called as the law of variable proportions.

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Answer 2

In Microeconomics or Production Economics,law of variable proportion basically states that the additional or incremental productivity or efficiency per unit of any factor input(marginal product or MP) decreases as more of that factor input is employed in the production process,keeping the other factors or inputs of production fixed.However,this law is only applicable in the short run.

Explanation:

• Law of variable proportion conceptually signifies the diminishing MP or marginal productivity of any factor input with its increasing utilization in the production process,keeping the other factor inputs constant.
• One of the important assumptions of the law is that only one factor or input of production is variable in the production process and all other factors or inputs are fixed.
• Hence,without any supplementary support from the other required resources of factor inputs,the MP of the factor input used in the production process decreases progressively exhibiting the law of diminishing marginal marginal product of the variable factor or input in the production process.
• Now,since all the factors or inputs of production are variable or adjustable in the long run and customarily,all other factors/inputs of production except only one is variable in the short run,law of variable proportion is only applicable in the short run.As all the production factors or inputs are variable in the long run,the firms or companies can effectively exploit or adjust them to enhance factor productivity of efficiency in accordance with their profit maximizing objectives.