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The Law of Variable Proportions describes the behaviour of output when:
Aall factors are increased in the same proportion
Bone input is varied while other inputs stay fixed
Cevery input is held completely fixed
Dfactors must be used in fixed proportions only
Answer & Solution
Correct answer: B. one input is varied while other inputs stay fixed
1. The Law of Variable Proportions studies output when the quantity of one input is varied while the others are held fixed, a short-run analysis.
2. So the correct condition is varying one input with others fixed.
3. Increasing all factors in the same proportion is the law of returns to scale, not variable proportions.
4. Holding every input fixed produces no change, and the law explicitly does not apply when factors must be used in fixed proportions.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 3 Unit I "Theory of Production", p.16_
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