Q. 11

(a) What is meant

Answer :

a) In short, run, assuming that the other factors of production or constant, the proportionate change in the total product is greater than the proportionate change in the units of a variable factor. This is called the law of increasing returns to a variable factor.

b) The two reasons for the decreasing returns to a variable factor are :


a. Overutilization of the fixed factor: In the third stage of the production, the variable factor is much more as compared to the fixed factor. This leads to the overutilization of the fixed factor.


b. Negative marginal product: Throughout the third stage of production, the Total Product is falling. The additional product by the additional unit of labour becomes negative. The cost of employing labour is higher than its contribution to the total product.


Rate this question :

How useful is this solution?
We strive to provide quality solutions. Please rate us to serve you better.
Try our Mini CourseMaster Important Topics in 7 DaysLearn from IITians, NITians, Doctors & Academic Experts
Dedicated counsellor for each student
24X7 Doubt Resolution
Daily Report Card
Detailed Performance Evaluation
caricature
view all courses
RELATED QUESTIONS :

What will be the Economics - Board Papers

Distinguish betweEconomics - Board Papers

When does ‘changeEconomics - Board Papers

A consumer consumEconomics - Board Papers

Define utility. EEconomics - Board Papers

Define demand. NaEconomics - Board Papers

When does ‘changeEconomics - Board Papers