LAW OF VARIABLE PROPORTIONQ2. Explain the Law of Variable Proporation.Ans. In the short-run the level of production can be changed by changing the factorproportions. This law examines the production function with on factor variable,keeping the other factors quantities fixed. In other words this law explains the short-run production function. When the quantity of one input is varied, keeping otherinputs constant, the proportion between factors changes. When the proportion of variable factors increases, the total output does not always increase in the sameproportion, but in varying proportion. This is why the law is named’ Law of Variableproportions’. The law of variable proportion is the new name given to the famous‘Laws of Diminishing Returns. ‘The law of variable proportion’ or the law of diminishing returns has been defined by a number of economists. In the words of F.Benham. “As the proportion of one factor in a combination of factors is increased,after a point, first the marginal and then the average product of that factor willdiminish”. This law explains return to a factor. Thus, the law states that if more and more units of a variable factor are applied to agiven quantity of fixed factor, the total output may initially increase at an increasingrate but beyond a certain level the total output, the rate of increase in total outputeventually diminishes in the use of additional units of the variable factor. Thevolume of goods produced can be looked at form three different angles viz. :(i)Total Product, (ii) Marginal Product and (iii) Average Product. Total product refers to the total volume of goods produced during a specified periodof time. Total product can be raised only by increasing the quantity of variablefactors employed in production. For instance, more shirts will be produced whenmore labour and capital are used. Total product, generally goes on increasing withan increase in the quantity of the factor services employed. But there is a limit towhich total product can increase with increase in the quantity of variable factors of production.Marginal Product (MP). The rate at which total product increases is known asmarginal product. We also define marginal product as the addition to the totalproduct resulting from a unit increase in the quantity of the variable factor. Initiallymarginal product rises, but ultimately it begins to fall down, it becomes zero and atlast becomes negative. It would be seen that the total product is maximum whenthe marginal product is zero.