# RBI Grade B (NRA): Law of Variable Proportion

Glide to success with Doorsteptutor material for UGC : Get detailed illustrated notes covering entire syllabus: point-by-point for high retention.

Download PDF of This Page (Size: 96K) ↧

## Define Laws of Variable Proporation? What is the Assumption of the Law

The law of variable proportions is a short-run production function. Where some factors are fixed and other variable, like land may be fixed and labour may be variable. Variable means its quantity can be changed.

## Statement of the Law

As equal increment of one point are added, the inputs of other productive services being held, constant, beyond a certain point the resulting increment of products will decrease i.e.. The marginal product will diminish.

The law of variable proportion is also know as the law of diminishing returns this law refers to the amount of extra output secured by adding to a fixed input more and more of variable inputs. If, for example we add increasing quantities of some variable factors (say labour) to a fixed factor (say land) and as ea result we get production more than proportionately, then it is known as increasing return to scale. When, however, the resulting production is in the same proportion it is known as constant returns and when he output is less than input it is the decreasing returns of scale.

## Assumption of the Law

- There Is Only One Variable Factor. All The Other Are Constant.
- The Units Of Variable Factors Are Homogenous In Character.
- It Is Possible To Change The Proporation In Which The Various Factors Are Combined Together.
- The State Of Technology Remains Unchanged.
- The Time Period Is Short