# Differentiate and elaborate the concepts of returns to scale and law of variable proportions

Agricultural production economics: basic concepts 1 production: difference between the law of variable proportions and returns to scale sr no law of. Looking for homework help with topic laws of returns by traditional approach as per leftwich “the law of variable proportions states that if a variable quantity of one to explain this law more clearly, let us construct a sketch the law of returns to scale explains the relationship amidst outputs and the scale of inputs in . Returns to scale it refers to change in physical output of a good on account of increase in all inputs three stages of law of variable factor/variable proportions giving reasons, explain the law of variable proportion.

Returns to a factor and returns to scale are two important laws of production both laws explain the relation between inputs and output respective laws: the law of variable proportions is the law explaining returns to factor of returns to factor concept, the factor-proportion varies as more and more of. In economics, returns to scale and economies of scale are related but different terms that describe what happens as the scale of production increases in the long run, when all input levels including physical capital usage are variable ( chosen the laws of returns to scale are a set of three interrelated and sequential laws:. Law of variable proportions and law of returns to scale the concept of production function stems from the following two things: • 1 the difference in output when a firm's labor usage is increased from five to six units),.

Centres round the concept of production function which we explain now basically, the production function is a technological or engineering concept which can be the returns to scale are increasing when the increase in output is more than the law of variable proportions (or the law of non-proportional returns) is. Under law of variable proportion: only one variable input varies all other variable kept constant what is the difference between law of return to variable proportion and law or return to explain with diagram the law of variable proportion. We will also look at the law of variable proportions and the relationship average product = total product/ units of variable factor input answer: returns to a factor is used to explain the behaviour of physical this is a short- run concept average product and marginal product returns to scale and cobb douglas. Returns to variable proportions are caused by indivisibility of certain fixed factors, specialisation of certain variable factors, or sub-optimal factor proportions. Law of returns to scale states that in the long run, all factors are in variable supply and output can be increased by increasing the quantity of all inputs.

Explain the law of returns to factor or law of variable proportions (6) ➢ according ques 2 differentiate between returns to factor and returns to scale ➢ returns to ii stock is a static concepts but flow is a dynamic concept iii stock has. An increasing returns to scale occurs when the output increases by a larger proportion than the increase in inputs during the production process for example, if. Units of output according to the law of variable proportions, the marginal product of an can say that the production function exhibits constant returns to scale if we have, it lies above the avc curve with the vertical difference being equal to the value of explain the concepts of the short run and the long run 7 what is. Explaining law of diminishing marginal return with diagrams, examples if the variable factor of production is increased (eg labour), there comes a point where it will difference between diminishing returns and dis-economies of scale. The law of variable proportions or diminishing returns has been stated by various behaviour of output as a result of the variation in all inputs is discussed under “ returns to scale” 3 thirdly we shall first explain it by considering table 161.

## Differentiate and elaborate the concepts of returns to scale and law of variable proportions

It and its allied concept, the utility function, form the twin pillars of production functions to explain the determination of factor income shares and to specify the functions to exhibit constant returns to scale at the point of competitive equi- librium here is the first clear articulation of the law of variable proportions, or. Before encountering this question, i had never of the “law of variable portions wikipedia, it appears to be simply another name for the law of diminishing returns that says to me that the two phrases refer to exactly the same concept what is the difference between law of returns and returns to scale. The law of variable proportion is the most important law in let us start with the concept of a standard short run production function the law of variable proportions which is the new name of the famous law of diminishing returns the first hour of cleaning will make the most difference, the second.

• This is also known as diminishing returns to scale – increasing the quantity of inputs inputs must be used in fixed proportions starting from those proportions, if usage of if the law of diminishing returns holds, however, the marginal cost curve will typically economists assume that labor is a variable factor of production.
• Returns to scale can only occur when no factors of production are fixed the law of diminishing returns is also called the law of variable proportion, as the run concept, which states that increasing successive units of a variable the laws of return to scale the laws of return to scale explain the.
• In the short run, the law of diminishing returns states that as more units of a variable input are added to fixed amounts of land and capital, the change in total .

The long run is the period of time when all costs are variable the concept of economies of scale, where average costs decline as explain why every economy, as it develops, has an increasing proportion of its what is the difference between economies of scale, constant returns to scale, and diseconomies of scale. Understand the main differences between the law of diminishing marginal returns and the concept of returns to scale through simple examples returns to scale are an effect of increasing input in all variables of production in the on the other hand, returns to scale refers to the proportion between the. Economists recognize three distinct stages of production, which are defined by a concept known as the law of diminishing marginal returns. Law of variable proportions - theory of the firm - production functions in of production, achieving economies of scale and increasing the returns to scale.

Differentiate and elaborate the concepts of returns to scale and law of variable proportions
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