question_answer

State different phases of the law of variable proportions on the basis of total product. Use diagram.

Or

Explain the geometric method of measuring price elasticity of supply. Use diagram.

Answer:

Law of Variable Proportion is enforced during short?run. It states that as more and more variable factors are used with the fixed factors. So, a stage must ultimately come when MP of variable factors starts declining.
Unit of Labour	T.P (Units)	MP (Units)
1	2	2
2	5	3
3	9	4
4	12	3
5	14	2
6	15	1
7	15	0
8	14	?1
According to the schedule and figure from origin to point K, TP is increasing at increasing rate and MP is also increasing.
From point K to T, MP is diminishing while TP is increasing at diministing rate.
At point T, MP is zero and TP is optimum.
Beyond point T, TP starts falling while MP becomes negative.
Or
Price elasticity of supply refers to the proportionate relationship between the percentage change in quantity supplied and percentage change in price.
According to Geometric Method elasticity of supply depend on the origin of supply curve.
Therefore, elasticity of supply should have three situations:
(a) Es = 1
(b) Es > 1
(c) Es < 1
(a) Es = 1 \[\Rightarrow \] When a straight line positively sloped supply curve starts from the point of origin.
(b) Es > 1 \[\Rightarrow \] when a straight line positively sloped supply curve starts from Y-axis.
(c) Es < 1\[\Rightarrow \]when a straight line positively sloped supply curve starts from X-axis.