When diminishing returns are reversed by a move to more capital-intensive means of production in agriculture, how does it impact the employment of labour?

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Solution

Mechanisation implies the use of capital (machinery) in place of labour. It raises productivity of labour, of course. But, leads to the emergence of surplus labour-a situation of unemployment.

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Output of food grain in India at one stage was less than its domestic demand. Now it is not. Does it mean that the law of diminishing returns has failed in Indian agriculture?

Q. Producer will adopt capital-intensive technique of production when the price capital is relatively cheaper than the price of labour.

Q. Fill in the blanks with appropriate alternatives given in the brackets:

i. Land is subject to ___________ returns. (increasing/ constant/ diminishing/ negative)

ii. ______________ is regarded as primary factor of production. (Land/ Labour/ Capital/ Entrepreneur)

iii. Capital is a __________ factor of production. (real/ artificial/ natural/ free)

iv. Land is a free gift of _______________. (nature/ human/ foreign/ nation)

v. __________ is a leader of organisation. (A capitalist/ A consumer/ A seller/ An organizer)

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Which of the following tables represents diminishing returns to scale?

Table 1			Table 2			Table 3			Table 4
K	L	TP	K	L	TP	K	L	TP	K	L	TP
1	2	10	1	2	10	1	2	10	1	2	10
2	4	30	2	4	20	2	4	25	2	4	50
4	8	100	4	8	40	4	8	35	4	8	200

In table : K stands for Capital, L for Labour, and TP for Total Production.
The correct option is-

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