1.

State the behaviour of marginal product in the law of variable proportions. Explain the causes of this behaviour.

Answer» <html><body><p></p>Solution :N/AThe law of diminishing <a href="https://interviewquestions.tuteehub.com/tag/returns-1187977" style="font-weight:bold;" target="_blank" title="Click to know more about RETURNS">RETURNS</a> to a factor states that Marginal Product of a factor initially rises with its employment <a href="https://interviewquestions.tuteehub.com/tag/level-1072714" style="font-weight:bold;" target="_blank" title="Click to know more about LEVEL">LEVEL</a>, but after a certain level of employment it starts falling and ultimately becomes negative.<br/>Reasons behind Phase-1<br/>(i) <a href="https://interviewquestions.tuteehub.com/tag/better-895998" style="font-weight:bold;" target="_blank" title="Click to know more about BETTER">BETTER</a> utilisation of fixed factor.<br/>(ii) Effecient utilisation of variable factor.<br/>(iii) Better co-ordination between factors.<br/>Reasons behind Phase-2<br/>(i) Over-utilisation of the fixed factor.<br/>(ii) Imperfect Substitution of factors.<br/>(iii) Poor Coordination.<br/>Reasons behind Phase-3<br/>(i) <a href="https://interviewquestions.tuteehub.com/tag/fixity-992170" style="font-weight:bold;" target="_blank" title="Click to know more about FIXITY">FIXITY</a> of fixed factor.<br/>(ii) Overcrowding of fixed factor.<br/>(iii) <a href="https://interviewquestions.tuteehub.com/tag/defective-946775" style="font-weight:bold;" target="_blank" title="Click to know more about DEFECTIVE">DEFECTIVE</a> factor ratio.</body></html>


Discussion

No Comment Found

Related InterviewSolutions