Consider the following statements about the law of variable proportions:
(A) It is also called the law of diminishing marginal product.
(B) It describes the behaviour of the marginal product of a variable input when other inputs are fixed.
(C) It operates when all factors are increased in the same proportion.
(D) According to it, the marginal product of an input first rises and then, after a certain level of employment, falls.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A), (B) and (D) only
(A) It is also called the law of diminishing marginal product. — Correct. Both are names for the same tendency of MP to rise and then fall.
(B) It describes the behaviour of the marginal product of a variable input when other inputs are fixed. — Correct. The law is about one input changing while the others stay fixed.
(C) It operates when all factors are increased in the same proportion. — Incorrect. When all factors rise in the same proportion, we are in the long run, and the idea is returns to scale.
(D) According to it, the marginal product of an input first rises and then, after a certain level of employment, falls. — Correct. This rise and later fall of MP is the law itself.
NCERT (2026-27): “3.4 The Law of Diminishing Marginal Product and the Law of Variable Proportions … Notice that the MP first increases (upto 3 units of labour) and then begins to fall. This tendency of the MP to first increase and then fall is called the law of variable proportions or the law of diminishing marginal product. Law of variable proportions say that the marginal product of a factor input initially rises with its employment level. But after reaching a certain level of employment, it starts falling.” “3.6 Returns to Scale The law of variable proportions arises because factor proportions change as long as one factor is held constant and the other is increased. … Remember that this can happen only in the long run. One special case in the long run occurs when both factors are increased by the same proportion, or factors are scaled up.” |