Which of the following law depict that “Marginal product of a factor input initially rises then after reaching a certain level of employment, it starts falling”.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Law of Variable Proportions.
Suppose a farmer keeps the land fixed and adds workers one by one. The first few make better use of the land, so each adds more output than the one before; later each has less land to work with, and the extra output falls. This rise and then fall in the marginal product of a factor is the law of variable proportions, and it gives the MP curve the shape of an inverse ‘U’.
Why the other options are incorrect
Option (1) Marginal Rate of Substitutions. — Incorrect. The marginal rate of substitution is the rate at which a consumer gives up one good for one more unit of another along an indifference curve. It belongs to consumer behaviour, not to production.
Option (2) Law of Marginal Product. — Incorrect. There is no such law.
Option (4) Decreasing Returns to Scale. — Incorrect. Returns to scale belong to the long run, when all inputs are increased in the same proportion. The law in the question keeps the other inputs fixed and changes one.
Note: A same/similar question was asked in CUET (UG) in the papers below.
| 2026 | 2025 | 2024 | 2023 | 2022 |
| 13-05 S2 06-06 S1* | 13-05 S2* 27-05 S2* 28-05 S2* | – | – | – |
* A similar question.
NCERT (2025-26): “3.4 The Law of Diminishing Marginal Product and the Law of Variable Proportions … 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. Why does this happen? In order to understand this, we first define the concept of factor proportions. 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.…” |