Question

State the different phases of change in the total product according to the Law of Variable Proportions. Use diagram

State different phases of the law of variable proportions on the basis of total product. Use Diagram.

Answer 1

Law of variable proportion in terms of TP:
Law of variable proportion states that as more of the variable factor input is combined with
the fixed factor input, a point will eventually be reached where the marginal product of the
variable factor input starts declining.

Units of Fixed Factor	Units of Variable Factor	TP	Stages
1	1	4	TP increases at an increasing rate (Increasing returns to a factor)
1	2	12
1	3	24
1	4	32	TP Increasing at a decreasing rate TP (Increasing at a diminishing returns to a factor)
1	5	34
1	6	34
1	7	30	TP starts falling (Negative returns to a factor)
1	8	21
1	9	10

In the above table,
Stage I: As more units of factor input are used, MP tends to rise till 3 units of factor input
are used. Here, the total product increases at an increasing rate till 5 units of factor input
are used which is called increasing returns to the factor input.

Stage II: However, when the 4th unit of factor input is used, the diminishing returns set in,
where MP starts decreasing and TP increases at a decreasing rate. Diminishing MP reduces
to zero. The total output is the maximum when the marginal output is zero.

Stage III: When MP is negative, TP starts declining from 34 to 10 when the 9th unit is employed