Question

State the behaviour of marginal product in the law of variable proportion

Answer 1

Answer:

Explanation:

Law of variable proportions is applicable in the short run only.

Under this law , there are three stages in the production of a good

1: increasing returns to a factor

In this stage , MP of a factor input increases and TP rises at an increasing rate. This occurs due to better utilisation of fixed and variable factors and better coordination between factors

Stage 2: constant returns to factor

In this stage, MP of a factor input falls and becomes zero while TP increases at a falling rate. This occurs due to overutilisation of fixed and variable factors and ineffecient factor ratio.

Stage 3: diminishing returns to a factor

In this stage, MP of a factor input becomes negative and TP falls. This occurs due to fixity of fixed factor, poor coordination between factors and ineffecient factor ratio