Answer to Question #193240 in Microeconomics for daniel

Question

 The law of diminishing returns or variable proportion is only applicable in the

Answer 1

Law of Diminishing returns or variable proportion states that in the short run, when more of variable factor is combined with fixed factor, the marginal return from additional factor starts diminishing and total output first increases and eventually it declines.

The law of diminishing returns or variable proportion is only applicable in the short run.

The law of diminishing returns or variable proportion occurs only in the short run. It states that as more of the fixed factor is combined with the variable factor, it finally results in decline in output. It occurs only in the short run because fixed factors only occurs in the short run. In the long run all factors are variable and there is no fixed factor.