Write the differences between Law of Variable Proportions/ Law of Diminishing Marginal Product/ Return to Factors and Return to Scale.
Points | Law of Variable Proportions | Return to Scale |
---|---|---|
1. Nature of behaviour | The law of variable proportion is a firm’s short-run production behaviour. | Return to scale is a firm’s long-run production behaviour. |
2. Changeability | Change in all factors to increase production in the short-run is financially impossible. | All factors can be changed in long-run. |
3. Nature of Change | In this law, one factor is changed keeping the other factors constant. | In this case, all factors together are changed. |
4. Presentation | In case of an increase in factor to production, it is shown on the horizontal and vertical axis of the diagram. | But in case of increasing return to scale, it is shown in an upward straight line from the origin. |
5. Also known as | The law of variable proportions is also known as the law of diminishing marginal product. This law applies to agriculture, industry, mining, fisheries and house building. | There is no other name for Return to scale. But it is applicable to production in terms of (i) increasing returns, (ii) constant returns and (iii) diminishing returns. |
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