What Is the Law of Variable Proportions?


Quick Answer

In certain applications of mathematics, particularly in business math and economics, the law of variable proportions states that the marginal product of a factor, when increased by itself, will eventually start to decline. In other words, increasing a single factor of production, such as labor or equipment, without increasing other related factors will lead to an increase in marginal product followed by an inevitable decrease.

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What Is the Law of Variable Proportions?
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Full Answer

In business and economics, calculating outcomes such as production requires a number of different equations. Once a business has formulated an approximation of its current production yield based on capital and labor availability, it can estimate future production levels. However, it is important that it also includes several important economic laws that might apply to the situation in these calculations. Chief among these is the law of variable proportions.

The law of variable proportions helps to make sense of long-term increases in scales of production. This is because it highlights the fact that if only one input is increased over time, and all other inputs remain constant, the marginal product that is produced will eventually start to decrease. This law operates under several assumptions. It assumes that technology remains unchanged and that all non-increasing variables are held constant. It also assumes that a single input can be changed without affecting other inputs.

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