THE THREE STAGES OF PRODUCTION

According to Cassels, there are three stages in the production process, when we vary one factor of production, the other factor remaining the same. In stage I, there is increasing average returns to the factor of production, i.e.d(q/l)/dl > 0 i.e. MPL > APL. In stage I, the average product is increasing and the marginal […]

Law of variable Proportions 

The law of variable proportions is also named as the laws of returns or the laws of returns to a variable factor. The law states that as the quantity of a variable impute is increased by equal doses, keeping the quantities of other inputs constant, total product will increase, but after a point, at diminishing […]