4 differentiate between returns to scale and returns to a variable factor 5 explain the concept of ridge lines long questions (8 marks) 1 explain the law of variable proportion 2 explain the concept of producer's equilibrium where producer minimizes the cost of production subject to a given output level 3 explain the. Calculate total cost identify economies of scale, diseconomies of scale, and constant returns to scale interpret graphs of long-run average cost curves and short-run average cost curves analyze cost and production in the long run and short run the long run is the period of time when all costs are variable the long run. Explaining law of diminishing marginal return with diagrams, examples diminishing returns occur in the short run when one factor is fixed (eg capital) 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. 3 write short notes on marginal product and average product 4 briefly discuss the concept returns to scale, increasing and decreasing returns to scale 5 explain the law of variable proportions 6 what is iso-quant 7 what do you mean by an expansion path 8 discuss the managerial uses of production function. Diminishing returns, also called law of diminishing returns or principle of diminishing marginal productivity, economic law stating that if one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached at which additions of the input yield progressively smaller,.
Gation, the fundamental differences between classical and unemployment versions of general equilibrium theory trace back to the issue of returns to scale a crucial proportions in any general equilibrium production system with constant returns to scale the absolute factor employment level represents an extra degree of. The main difference between short run and long run production function lies in the fact that in short run production function, law of variable proportion operates, whereas in the long run production function, law of returns to scale operates.
Inputs both fixed as well as variable in the same proportion for example, the laws of returns to scale each firm has its own production function which is determined by the state of technology, managerial ability, organizational skills etc of a firm if there are any improvements in them, the old production function is disturbed. 7 known as the laws of returns to scale the production function with two variable inputs is otherwise known as production function through isoquants the main aspects dealt with under production analysis are: production functions, returns to scale, isoquants, economies and diseconomies of scale 3 cost analysis.
Based on the theory of firm, these principles explain various cost concepts, output response to inputs and the use of inputs/resources to maximize profits 4 difference between the law of variable proportions and returns to scale sr no law of variable proportions returns to scale 1 describes the behaviour of output. Explain the concepts of the short run and the long run answer law of diminishing marginal product means that when more and more units of a variable factors are employed along with a fixed factor, the marginal product of when does a production function satisfy decreasing returns to scale answer a.
In this lesson we will be talking about differences between law of variable proportions and returns to scale. The law of diminishing returns is also called the law of variable proportion, as the proportions of each factor of production employed keep changing as more of distinguish between diminishing returns and economies of scale (15 marks) in business economics, the short run is defined as the concept that. This presentation puts emphasis on law of variable proportion and law of returns to scale it also puts light on production function, cost function, etc.
Diff returns to scale vs law of variable proportion, learn theory of production, what is production production function law of variable proportion, return. The performance of the law of variable proportions are of short run production function when one factor is invariable and the other variable, can also be “the laws of returns to scale refer to the effects of a change in the scale of factors upon output in the long run when the combinations of factors are changed in some. Returns to scale it refers to change in physical output of a good on account of increase in all inputs required to produce a good simultaneously in the same proportion this is a long-term phenomenon 8law of variable proportion it states that as more and more units of the variable factors are used.