The Law of Variable Proportions Definition, Explanation & Graph

Mon, 10/07/2013 - 23:28 -- Umar Farooq

The Law of Variable Proportions Definition

The law of variable proportions shows a particular pattern of changes in output and is an explanation of short run production function where some factors remain unchanged. In the history of economics till the time of Alfred Marshall, there were three laws of return, increasing, constant and diminishing laws of return. Much time was wasted in this issue. However, it was later on realized that there are three stages of production i.e. increasing, diminishing and negative returns. In this law the whole production process is divided into three stages.

Statement of the Law

"As the quantity of one variable input in a production process is Increased, with quantities of other Inputs remaining fixed, marginal physical product firstly increases, then after reaching a maximum, starts decreasing and finally becomes negative".

Assumptions of the Law

The law is based on certain assumptions some of which are outlined below

  1. Land is considered as the fixed factor of production
  2. Labour is assumed as a variable factor of production.
  3. All workers involved in production are equally efficient.
  4. There is short-run in the economy during which fixed factors of-production cannot be changed.

Explanation

The law can be explained with the help of the following schedule and diagram.


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