Question

xplain the likely behaviour of marginal production when only a factor of production is increased in short run and all other factors of production are kept constant. Use diagram​

Answer 1

Answer:

Law of variable proportion or returns to variable factor - This law state that keeping other factors of production constant, when only one variable factor is increased, in the beginning total physical product increases at an increasing rate, then increases at a decreasing rate and ultimately decline. This law is applicable in short period only. This law has three phases- I- Increasing returns to a factor - In this phase MPP increases so TPP increases at an increasing rate. Reasons for increasing returns to a factor are - better utilisation of fixed factor, increase in efficiency of variable factor, indivisibility of fixed factors. II- Diminishing returns to a factor - In this phase MPP decreases but positive so TPP increases at decreasing rate .