Chapter 5 Solutions for Class 12 Microeconomics by Sandeep Garg

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Chapter 5 Solutions for Class 12 Microeconomics by Sandeep Garg

Class 12 Microeconomics Sandeep Garg Solutions Chapter 5 – Production Function

Sandeep Garg Economics Class 12 Solutions for Chapter 5 is available in PDF format on Vedantu.com and students can download the PDF for free. Sandeep Garg Class 12 Microeconomics Solutions for Chapter 5 provide an easy and understandable explanation of the chapter. The subject experts at Vedantu have prepared these solutions keeping in mind the problems commonly faced by students while answering the questions from this chapter. The Sandeep Garg Solutions Class 12 Microeconomics Chapter 5 will help students to develop a conceptual understanding.

By referring to these solutions, students will get an insight into the topics covered in the chapter and will be able to solve the questions independently. The Sandeep Garg Economics Class 12 Chapter 5 Solutions will help students get a thorough understanding of the fundamentals of the chapter and revise it easily during their exams.

Reasons Behind Increasing Returns to the Variable Factor in Short-run Production

1. Efficient Utilization of The Fixed Factors: At the first stage, when more variable factors are employed to increase the output, then the fixed factors (say, some machines) can be utilized more efficiently. The productive capacity of the fixed factors can be utilized in a better way. For example, a machine can produce 200-meters of cotton cloth per day. If one worker can operate that machine and works for 8 hours per day, the productive capacity of that machine cannot be fully utilized by employing only one worker. If another worker is employed, the machine can run for another 8 hours. As a result, the output can be increased at a steady rate.

2. Technical Division of Labor: If labor is regarded as the only variable factor, then the increased amount of labor can also lead to a technical division of labor at the initial stage. It increases the marginal product of labor. For example, a power loom factory may have 8 power looms and it requires at least four weavers per shift (8 hours per shift) for the proper operation of these looms. This factory also requires another two workers to operate the yarn-reeling machine. Thus, with the increase in labor employment at the initial stage in this factory, some of them will operate the reeling machines, while some others will operate the power looms. This leads to technical division of labor. This process helps in carrying out the whole production process in a smooth way and leads to increasing return to variable factors.

3. Better Coordination between The Factors of Production: At the initial stage, the fixed factor remains under-utilized. So, additional employment of the variable factor (i.e., Labor) leads to better coordination between the fixed and variable factors. Thus, the variable factors can be systematically engaged to operate the fixed factor. This also raises the marginal product of the variable factor,

Reasons Behind the Operation of Diminishing Returns to a Variable Factor in Short Run Production:

1. Employing Variable Factor Beyond The Optimum Proportion: The efficient utilization of the fixed factors becomes possible only when we reach the optimum factor proportions (i.e., an optimum combination of man and machine in our case) If two automatic power looms can be operated by a single weaver, then the optimum proportions in which capital (K) (Or machine) and labor (L) has to be employed, will be 2:1. If more weavers are employed then there will be confusion in the whole system. Extra workers may just remain idle since they may not have adequate fixed factors to work. In such cases, there will be a diminishing return to the variable factor.

2. Imperfect Substitution Possibilities between Factors: Different factors of production (say, man and machine) are not perfect substitutes. So, when more and more laborers are employed keeping the plant and types of machinery unchanged, then increased numbers of workers are not supposed to perform the same work as would have been possible with an extra amount of capital. As a result, there would be a diminishing return to the variable factor. (i.e., Labor).

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FAQs on Chapter 5 Solutions for Class 12 Microeconomics by Sandeep Garg

1. What are the total physical product and marginal physical product in Sandeep Garg Economics Class 12 Solutions for Chapter 5 Production?

Total Physical Product or Total Product refers to the total amount of commodity produced during a period by combining a particular quantity of a variable factor with the fixed factor. It is also called Total Return. Marginal Physical Product or Marginal Product is defined as the change in the total product resulting from one additional unit of a variable factor. It is also called Marginal Physical Product. The relationship between TPP and MPP is when TPP increases at an increasing rate, MPP increases. When TPP increases at a decreasing rate, MPP decreases. When TPP reaches a maximum, MPP becomes zero. When TPP starts decreasing, MPP becomes negative.

2. What is the law of variable proportion taught in class 12 Economics?

The Law of Variable proportion states that as more and more of a variable factor are applied to the given quantity of a fixed factor, the total product may increase at an increasing rate initially, but eventually it will increase at a diminishing rate. Expressed in terms of marginal and average product the law states that if more and more units of a variable factor are applied to a given quantity of fixed factor, marginal product and average product of the variable factor will eventually decrease after increasing initially.

3. What is the production function of Sandeep Garg Economics Class 12 Solutions for Chapter 5 Production?

The functional relationship between input and output is usually referred to as the production function. A production function shows the maximum quantity of a commodity that can be produced as per unit of time with the given amount of input when the best production technology is used. There are two types of production functions – the first is short-run production function and the second is long-run production function. All these concepts are well discussed in Sandeep Garg Economics Class 12 Solutions for Chapter 5 Production.

4. Which stage of production in the short run is the relevant stage of production in Sandeep Garg Economics Class 12 Solutions for Chapter 5 Production?

A rational producer will always seek to operate in the second phase of the law of variable proportion. In the first phase, the employment of every additional unit of variable factor gives more and more output i.e., marginal product increases. It means that there is scope for more profit if production is increased with more units of the variable factor.

In the third stage of short-run production, the marginal product of each variable factor is negative. So, this phase is ruled out on the ground of technical inefficiency and a rational producer will never produce in the third phase. This brings us to the conclusion that a producer will aim to operate in the second phase, as the Total Product is maximum and the Marginal Product of each variable factor is positive).

5. What is the difference between short-run and long-run?

The following are a few differences between short-run and long-run:

Short-run refers to a period in which output can be changed by changing only variable factors. On the other hand, the long run refers to a period in which output can be changed by changing all the factors in production.
Short-run is classified as variable and fixed factors. In the long run, all factors are variable.
Demand is more active in price determination as supply cannot be immediate with an increase in demand in the short run. Whereas in the long run, both supply and demand play an equal role in price determination as both can be increased. You can find the PDF version of this book available for free on Vedantu. You will also find many other resources that will help you study and improve your preparation on Vedantu. Take a minute and go through our website for class 12 Economics.