LAND UTILIZATION Land is a scarce resource, whose supply is fixed for all practical purposes. At the same time, the demand for land for various competing purposes is continuously increasing with the increase in human population and economic growth.Land use pattern at any given time is determined by several factors including size of human and livestock population, the demand pattern, the technology in use, the cultural traditions, the location and capability of land, institutional factors like ownership pattern and rights scale regulation. Major Types of Land Utilization in India : As in all other countries, land in India is put to various uses. The utilization of land depends upon physical factors like topography, soil and climate as well as upon human factors such as the density of population, duration of occupation of the area,land tenure and technical levels of the people.There are spatial and temporal difference in land utilization due to the continued interplay of phys...
Law of variable proportion
Introduction :The law of Variable proportion of production is one of the fundamental laws of economics given by a French Economist. This law deals with behaviour of production in short run where volume of production can be changed with the use of variable factors . Fixed factors remains constant.
Meaning : This law shows that continuous change in proportion of factors of production changes the total product first at increasing rate, then at constant and after a point the output change takes place at diminishing rates. In other words , Law of variable proportion states that as more and more of variable factor is combined with the fixed factor, a stage must ultimately comes when marginal Product of the variable factor starts declining.
Assumptions
a)The law of variable proportion assumes the techniques of production as constant .If the technology changes ,it will have effects on MP and AP.
b)The law operates in short rum because some factors are fixed and proportion of others has to be varied .
c)The law is based on the assumption that variable resources is applied unit by unit and each factor unit is homogenous.
d)The law supposes the possibility of ratio of fixed factors to variable factors being changed.
Explanation : The Law can be explained with the help of an example . Suppose, a farmer has 10 acres of land to cultivate. The land has some fixed investment in tubewell, equipments. In order to increase the output of a farm, he needs more variable factor i.e labour. The land and capital here is fixed factors of production while labour being variable factor of production. The change in the number of men employed will change the total output also.
No. Tp of men Ap. Mp of labour
1. 50. 50. 50
2. 110. 55. 60
3. 135. 45. 25.
4. 150. 37. 15.
5. 160. 32. 10.
6. 165. 27. 5.
7. 165. 23. 0.
8. 160. 20. -5.
At first , the number of men is increased from 1 to 2 ,MP of labour as well as AP increases. But as more men are employed , the average product falls and marginal product falls faster. Hiring of 7th men is fruitless as he adds nothing to the production on the farm. The 8th men, if employed will create nuisance and thus it's marginal productivity is shown as negative.
Stages :It shows three stages
a)Stage of increasing returns : Here , when we add variable factors to the production , the total product rises at first , the marginal product continues to increase and fall to equal the average product .If we add more variable factor units, Mp starts falling but AP rises so long as MP is above it. With the addition of 2nd men to the farm , the first stage comes to an end .
b)Stage of diminishing returns : This stages starts with the addition of 3rd men to the farm. Here, TP increase but at lesser rate, MP of labour becomes less than AP. After the 3rd men the AP starts declining ad MP curve falls faster than AP. The MP becomes zero with the addition of 7th men . The AP as well as MP are falling but still are positive.
c)Stage of negative returns : With the addition of 8th men , TP starts declining MP becomes negative. when the variable factors is used in larger quantity than it reduces the total product .
Relationship between TP ,MP ,AP
a) When MP is increasing,TP increases at increasing rate .
b)When MP is decreasing,TP is increasing at diminishing rate .
c)When MP is 0,there is no addition to TP.
d)TP is maximum where MP is 0
e)When MP is negative ,TP starts declining.
f)AP increases as long as MP is greater than AP.
g)AP decreases ,when AP is greater than MP.
h)AP is at its maximum when AP=MP ,where MP cuts ap from the above.
i) MP can be negative but AP continues to be positive.
Universality of the law
According to the Marshall, the two laws of production are law of diminishing returns and law of increasing returns . The latter applies to industry and the former applies to the agriculture.
Modern economists - According to them, Law of production Works Only in Short Period and is Called as Law Of variable proportion. It consists of three Stages- Increasing returns , diminishing Returns, Negative returns.
Classical economists- According to them,laws Of Production is discussed on the three stages of law of variable proportion. These laws are law of increasing returns , laws of constant returns and law of diminishing returns .
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