List the assumptions of the law of variable proportions also called the law of diminishing returns.

Answers

i. Short run. The law assumes short run situation. The time is too short for a firm to change the quantity of fixed factors. All the resources apart from this one variable, are held unchanged in quantity and quality

ii. Constant technology. The law assumes that the technique of production remains unchanged during production.

iii. Perfect divisibility of factors of production

iv. Homogeneous factors. Each factor unit in assumed to be identical in amount and quality.

v. The production function is characterized by : a. decreasing marginal product (MP) for all factor-product combinations; b. decreasing rate of technical substitution between any two factors; c. an increasing rate of product transformation between any two products

marto answered the question on April 16, 2019 at 12:45

Next: State two requirements during computer program testing.
Previous: What are the disadvantages of Product Differentiation?

View More Production Economics Questions and Answers | Return to Questions Index

List the assumptions of the law of variable proportions also called the law of diminishing returns.

Answers

Exams With Marking Schemes

Related Questions