Question

Which of the following assumption is applicable for the law of variable proportion?

• A. The state of technology is assumed to be given and constant
• B. There must be some inputs whose quantity is kept fixed
• C. There are two factors of production
• D. All of the above

Answer 1

The correct option is D All of the above

It is only possible for the law of variable proportions to operate under specific conditions.

1. The state of technology is given and remains unchanged

2. It is assumed that some inputs are fixed while others are varied. As it is only then that the factor proportions can be changed.

3. It is assumed that technology is such that it is possible to change the factor proportions. The law will not apply in situations where the factors of production must be used in fixed proportions.

4. It is assumed that all the units of the variable factor are homogeneous and are equally efficient. (eg every worker hired is equally efficient).