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The Law of variable proportions examines the Production function with:
- a)One factor variable and only one factor fixed
- b)One factor variable keeping quantities of other factors fixed
- c)All factors variable
- d)None of the above
Correct answer is option 'B'. Can you explain this answer?
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The Law of variable proportions examines the Production function with:...
Law of Variable Proportions
The Law of Variable Proportions is an economic law that explores the relationship between the quantity of a single factor of production and the total output of a product. It is also called the Law of Diminishing Returns.
One Factor Variable Keeping Quantities of Other Factors Fixed
According to the law of variable proportions, when the quantities of all factors of production, except one, are fixed, the output of the product will increase initially at a constant rate, but after a certain point, it will start to decrease. This happens because the marginal product of the variable factor starts to decline as more and more of it is added to the fixed factors.
For example, if a firm employs fixed amounts of land, capital, and labor and increases only the quantity of labor, the output of the product will increase initially at a constant rate. However, after a certain point, the output will start to decrease as the marginal product of labor starts to decline due to overcrowding and overuse of the fixed factors of production.
Conclusion
Therefore, the Law of Variable Proportions examines the production function with one factor variable, keeping the quantities of all other factors fixed. This law is crucial in determining the optimal level of production and the efficient allocation of resources.
The Law of Variable Proportions is an economic law that explores the relationship between the quantity of a single factor of production and the total output of a product. It is also called the Law of Diminishing Returns.
One Factor Variable Keeping Quantities of Other Factors Fixed
According to the law of variable proportions, when the quantities of all factors of production, except one, are fixed, the output of the product will increase initially at a constant rate, but after a certain point, it will start to decrease. This happens because the marginal product of the variable factor starts to decline as more and more of it is added to the fixed factors.
For example, if a firm employs fixed amounts of land, capital, and labor and increases only the quantity of labor, the output of the product will increase initially at a constant rate. However, after a certain point, the output will start to decrease as the marginal product of labor starts to decline due to overcrowding and overuse of the fixed factors of production.
Conclusion
Therefore, the Law of Variable Proportions examines the production function with one factor variable, keeping the quantities of all other factors fixed. This law is crucial in determining the optimal level of production and the efficient allocation of resources.
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The Law of variable proportions examines the Production function with:a)One factor variable and only one factor fixedb)One factor variable keeping quantities of other factors fixedc)All factors variabled)None of the aboveCorrect answer is option 'B'. Can you explain this answer?
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