What is the law of variable proportions?
The law of variable proportions states that as more units of a variable input are employed with fixed inputs, the marginal product initially rises but eventually falls after reaching a certain level of employment.
This law operates in the short run where at least one factor remains fixed. Initially, as the variable input increases, factor proportions become more suitable for production, causing marginal product to rise. However, beyond a certain level, the production process becomes too crowded with the variable input, leading to a fall in marginal product.
This tendency of marginal product to first increase and then fall is also called the law of diminishing marginal product.
Explanation
The textbook explains that the law of variable proportions describes how marginal product behaves when one factor is held constant and another is increased. The context clearly states that MP first increases (as factor proportions become more suitable) and then falls (as the process becomes too crowded). This is a fundamental concept in production theory for Class 12 Economics.