Practicing Success
Practicing Success
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| The output of a farmer having 4 hectares of land 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, marginal product increases. When the fourth worker is hired, the land begins to get crowded. So the output added by each additional worker is now proportionally less. Hence, marginal product begins to fall. Which law is talked about in above case? |
Law of variable proportion Law of returns to scale Law of diminishing marginal product Both 1 and 3 |
| Both 1 and 3 |
| Law of variable proportions is also called law of diminishing marginal product. And the law states that :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. |
