Answer:
Law of variable proportions As per the law of variable proportion, if more and more units of variable factor (labour) are combined with the same quantity of fixed factor (capital) then initially the total product will increase. But gradually, after a point, the total product will fall. Behaviour of MP Stages Stage?s Name MP Range I Increasing Returns to a factor MP increase till point U From 0 to point U II Diminishing Returns to a factor MP falls and touches x-axis From U onwards III Negative Returns to a factor MP becomes negative Beyond x-axis The main reason behind this behaviour of MP is Law of Diminishing Marginal Product. According: to the Law of Diminishing Marginal Product, if the employment of variable factor is kept on increasing along with the constant level of the fixed factor, then finally a point will be reached where after, the marginal product of the variable factor will start falling and after this point the marginal product of any additional variable factor can be zero and even be negative.
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