Assumptions of the law of diminishing returns (law of variable proportions)
- It assumes a short run period
- It assumes existence of a variable factor
- It assumes existence of a fixed factor
- It assumes constant technology
- All units of a variable factor are homogeneous
- Assumes that all factors of production are divisible and they are easy to change in proportions in which they are combined:
- It assumes that factors of production are equally efficient in the production process. That is, they have the same skills, level of education etc.
- It assumes constant factor prices.
CATEGORIES Economics
TAGS Dr. Bbosa Science
