With the help of the concept of production function explain the difference between law of variable proportion and law of return to scale and eloborate by example
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Heya...
Law of variable proportion...
It is a short term concept...
It states that when more and more unit of variable factors is combined with fixed factor then Firstly MP rises but at a point it starts to decline and zero and negative...
Return to scale.....
It is long run concept....
According to this output can be increased only by increasing both factors as fixed as well as variable factors...
Law of variable proportion...
It is a short term concept...
It states that when more and more unit of variable factors is combined with fixed factor then Firstly MP rises but at a point it starts to decline and zero and negative...
Return to scale.....
It is long run concept....
According to this output can be increased only by increasing both factors as fixed as well as variable factors...
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