Question

If more variable factors are employed to fixed factors, the total product increases initially at increasing rate and finally it decreases. Explain this law with the help of a diagram.

Answer 1

The law of variable proportions explains the behavior of output when more units of a variable factor (like labour) are added to fixed factors (like land or machinery) in the short run.

This reflects three stages:

1. Increasing returns
2. Diminishing returns
3. Negative returns

Explanation with a diagram:

Let me now provide a clear diagram showing how total product (TP) changes with increased use of a variable factor (labour), including marginal product (MP) and average product (AP) to visualise the law.