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Law of Variable Proportion
Law of Variable Proportion
Law of Variable Proportion
Law of
Variable
Proportion
B Sarah
NIT - K
Production
Ordinary language: Creation of material things
Technological
relationship that
gives maximum Expression of Q=f(F1, F2, …, Fn )
output the relationship Where, Q = Quantity of output
producible from between inputs F1, F2, …, Fn = Factors or Inputs
various and outputs used to produce the output
combination of
inputs
B Sarah
NIT - K
B Sarah
NIT - K
B Sarah
NIT - K
Law of Variable Proportions
Statement of law
Law of Variable Proportion states
that as we increase quantity of only
one input keeping other inputs fixed,
total product (TP) initially increases
at an increasing rate, then at a
decreasing rate and finally at a
negative rate.
Marginal Product = (dTP) / (dVI), where TP is total product and VI is variable inputs
MP = TPn – TP (n-1)
➢ MP becomes negative 10
➢ TP starts diminishing 5
6
-5
TPL MPL AP L
B Sarah
Graph of Law of variable Proportions NIT - K
B Sarah
NIT - K
Reasons for Law of Variable Proportion
• Better utilization of Fixed factor
Increasing • Increased Efficiency of Variable Factor
Returns to a factor • Indivisibility of Fixed Factor