Question

What is the law of diminishing marginal product and how is it different from the law of variable proportions?

Answer 1

Dear student,

Law of diminishing marginal product states that as we increase a variable factor, keeping other factors constant the marginal product of variable factor starts declining after a certain level of production.

Law of variable proportion states that when more units of variable factor are added to fixed factor, total product increases at an increasing rate initially, then it increases at diminishing rate and reaches the maximum and then began to fall.

Law of variable proportion is an extension of the law of diminishing marginal product. The former explains the behaviour of TP, AP and MP in three stages of production while the latter explain the behaviour of MP.