Question

Which of the following statements with respect to the law of variable proportions is true?

• A. The marginal product of a factor input initially falls with its employment level, but after reaching a certain level of employment, it starts falling even more, causing a depression.
• B. The marginal product of a factor input initially drops with its employment level, but after reaching a certain level of employment, it starts rising.
• C. The marginal product of a factor input initially rises with its employment level and remains consistent throughout.
• D. The marginal product of a factor input initially rises with its employment level, but after reaching a certain level of employment, it starts falling.

Answer 1

Answer: (D)

Law of variable proportion is also known as the law of proportionality. The law says that if we keep increasing the amount of an input, with other input fixed, eventually a point will be reached after which the resulting addition to output (Marginal product of that input) will start falling.