Law of Variable Proportions

Law of Variable Proportion Definition

The law of variable Proportion is considered an important theory in Economics. It is called a law that when the value of one production element is increased, while all other factors are kept unchanged, it will lead to a decrease in the product output of that item.

The law of variable proportion is also known as the Law of Equality. When the dynamic factor becomes higher, it can lead to a negative value of the third party product.

The law of variable proportion can be understood as follows.

If the dynamic factor rises while all other factors are kept constant, the product price will initially increase at an increasing rate, the next level will decrease with the decrease and eventually there will be a decrease in production.

Consideration of the Variable Partial Law

The variable rate law works well under certain circumstances, which will be discussed in the following lines.

Continuous Technological Situation: It is assumed that the state of the art will be the same and with the advancement of technology, production will improve.

Flexible Character Estimates: This assumes that production characteristics vary. The law does not apply, if the production features are fixed.

Homogeneous factor units: This assumes that all units produced are the same in quality, quantity and price. In other words, units have the same nature.

Short Run: This assumes that this rule applies to those systems that run for a short period of time, where it is not possible to change all the included features.

Legal Categories of Flexible Value

The Variable Evaluation Act has three sections, which are discussed below.

Phase One or Phase Growth Row: At this stage, product volume increases with increasing rate. This is due to the fact that the efficiency of the embedded material increases with the addition of flexible inputs to the product.

Second Phase or Decreased Return Phase: In this phase, the product volume increases with a decrease in value until it reaches a high point. Side product and rating is good but it is slowly declining.

Third Phase or Negative Return Phase: In this phase, the product volume decreases and the side product becomes negative.

The Transformal Rates or Restoration Act plays an important role in Product Theory research. In this article, we will consider the definition, definition, categories, significance, and reasons for the application of the Variable Standards Act.

Also, if you get more output using the input unit, then this output may be equal to or less than the output you received in the previous unit.

The Variable Ratings Act worries about how the output changes when increasing the number of units of a variable. Therefore, it refers to the effect of a variable factor-ratio on the output.

In other words, the law indicates the relationship between the units of a variable element and the output value in the short term. This assumes that all other factors do not change. This relationship is also called restitution is a dynamic element.

The law states that to keep certain aspects unchanged, when you increase the dynamic element, the product volume initially increases with increasing rate, then increases with decreasing rate, and eventually begins to decline.

Why is it called the Flexible Standards Act?

As one input changes and all others remain unchanged, the factor or component factor varies. Let's look at an example to better understand:

Suppose you have 10 hectares of land and 1 unit of production. Therefore, the global workforce is 10: 1. Now, if you keep the land unchanged but raise 2 staff units, the average workforce is 5: 1.

So, as you can see, the law analyzes the effects of a change in the factor ratio on the output value and that is why it is called the Flexibility Measurement Act.

The Variable Ratings Act Explained

Let's understand this law with the help of another example:

In this example, the earth is an integral part of work and work is a dynamic element. The table shows the different product values ​​when using different work units in one hectare area that needs to be adjusted.

The following diagram illustrates the law of flexibility. To make a simple presentation, we draw the curve of Total Physical Product (TPP) and Marginal Physical Product (MPP) curves as smooth curves against flexible inputs (workers).

FAQs on Law of Variable Proportions

1. What is the Importance of the Law of Variable Proportion? How is it Different From Returns to Scale?

The law occupies an important place in the economic world. The diminishing returns phase of the law of variable proportion has universal application in the field of production. Many economic principles are derived from the law of variable proportion. This law applies as much to the agriculture sector as to industries.

Whereas the returns to scale applications in the long run and all factors are increased simultaneously. There is no difference between fixed and variable factors of production. There are 3 stages namely, increased returns, constant returns, and decreasing returns, and no stage is considered best for the long run.

2. State the Law of Variable Proportion with its Assumptions.

The law of variable proportion applies to all fields of production namely agriculture, industry, etc. This law applies to every field where some factors are fixed and another variable. The law states that up to the use of a certain amount of variable factor, the marginal product may increase and after a certain stage, it starts diminishing. The law of variable proportion holds good under the following conditions:

  1. The fixed amount of other factors.

  2. The constant state of technology.

  3. Possibility of varying the factor proportion.