Laws Of Return Flashcards
Define total product.
Define average product.
Define Marginal product.
Definition of Total Product: A certain quantity of output produced by a firm by employing certain units of a factor of production at a given time is known as total product.
For example, a firm produces one thousand meters of cloth by employing ten units of labour. This one thousand meters cloth is the total product of this firm.
Definition Average Product: Per unit output of a factor of production is called average product. To know average product, total output of a factor is divided by its units.
“Total output
Average product - Units of factor
Definition of Marginal Product: The increase in total output by employing an additional unit of a factor is called marginal product. For example, if 100 meters cloth is produced by employing ten units of labour and by employing an additional unit of Inbour or eleven units of labour, total product rises to 105 meters, then production of 11th unit or marginal product
will be 105-100 = 5 meters.
Define law of increasing return.
(iv)
0.5:
Ans:.
Definition of law of increasing Return: In production process, when marginal product increases with the increase in units of variable factors along with fixed factor, it is called law of increasing return.
Define law of diminishing return.
0,6:
Ans:
Definition of law of Diminishing Return: In production process, when units of variable factors along with fixed factor of production are increased and increase in total production is less than units and as a result marginal product goes on falling. This tendency of fall in marginal product is called law of diminishing return.
Define law of constant return.
Q.7:
Definition of law of Constant Return: If in a production process, along with the fixed factor of production, by increasing units of variable factors, marginal product remains constant, then this tendency of change in production is called law of constant return.
Why is law of increasing return called law of decreasing cost? or What is meant by law of decreasing cost.
production process is under law of increasing return, then mar inal product intens is
al as a result per unit marginal cost decreases. That is why, law of increasing return is also called law of decreasing cost.
