According to the law of variable proportions, which among the following option is correct?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → The marginal product of an input initially rises and then, it starts falling.
By the law of variable proportions, the marginal product (MP) of an input first rises and, after a certain level of employment, starts falling. MP is the extra output from one more unit of the input.
Factor proportions are the ratio in which two inputs are combined. If one input is fixed and the other keeps increasing, this ratio changes. A farmer with 4 hectares and one worker has too much land for that worker. More workers suit the land better, so each adds more output and MP rises. After a point the land becomes too crowded with workers, and MP falls.
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.… …Factor proportions represent the ratio in which the two inputs are combined to produce output.… …As we hold one factor fixed and keep increasing the other, the factor proportions change. Initially, as we increase the amount of the variable input, the factor proportions become more and more suitable for the production and marginal product increases. But after a certain level of employment, the production process becomes too crowded with the variable input. Suppose table 3.2 describes the output of a farmer who has 4 hectares of land, and can choose how much labour he wants to use. If he uses only 1 worker, he has too much land for the worker to cultivate alone. As he increases the number of workers, the amount of labour per unit land increases, and each worker adds proportionally more and more to the total output. Marginal product increases in this phase. When the fourth worker is hired, the land begins to get ‘crowded’. Each worker now has insufficient land to work efficiently. So the output added by each additional worker is now proportionally less. The marginal product begins to fall.…” |