# Bcom 1st Year Assumptions of the Law of Diminishing Returns notes

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## Bcom 1st Year Assumptions of the Law of Diminishing Returns notes

Concepts of Origin Haas Law

Like other economic rules, this rule is also based on certain assumptions. The beliefs of this rule are as follows –

(1) The proportion of meeting the means of production can be changed at will.

(2) For the functioning of this rule, it is necessary that if one instrument is variable, one instrument must remain constant or if one instrument is variable, the other means must remain constant.

(3) All units of the variable instrument should be identical.

(4) This rule will be operational only when sufficient units of the variable instrument have been used.

(5) It is assumed that there is no change in the method, art and method of production (technology) during the period of action of the rule.

(6) This rule relates to the physical quantity of the object, not its value.

(7) If the truth of this rule is to be considered from the point of view of cost, then it is necessary that all the instruments (fixed and variable) and the prices of the products are given in order for the rule to be operational.

Causes for the Application of the Law of Diminishing Returns

The main reason given for this rule to be effective is to answer:

When one or a few instruments are kept constant and the remaining ones are variable, the full potential of the variable means is not utilized, resulting in a loss of production power. In other words- (i) Different means of production are always available in limited quantities, the supply of any instrument cannot be increased infinitely and different means are in a state of optimum coincidence at a certain point, but when some means are available. The optimal coincidence condition is eliminated when the quantity is kept constant. Decreases and production power begins to decline.

In other words, human beings do not have full authority over the means of origin, so it is not possible to maintain the means in ideal proportions. Additionally, the means. Inseparability also proves to be a hindrance in their best use.

2. The means of production are not fully substituted (Factors production not fully substituted) –

One means of production can be used to a limit in place of another. If the various instruments could be completely replaced, then neither the question of the finality of any means would arise, nor would the origination loss rule be operational. In the words of Mrs. Joan Robinson – “An instrument can only be replaced to a limit in place of another â€¦â€¦.”

Field of rule

(Scope of the Law)

Prof. Marshall considered the area of â€‹â€‹activity of this rule to be limited only to agriculture and some other land related occupations (eg, fish industry, mining etc.), but this is not true. According to modern economists, this rule is applicable in all fields of production. The only condition is that the production process continues for a long time. In the words of Prof. Wicksteed – “The functionality of this rule is universal.” (This law is as universal as the law of life itself.)

Modern thinkers believe that this rule applies in all areas of production and the origin growth law and the origin parity rule have their own stages. In the words of Prof. Saligman- “The gradual descent decrement law is the general rule of origin and the gradual rise and fall of origin is only a temporary form of the decreasing rule.” In the words of Mrs. Joan Robinson – “The Genesis growth rule is a logical necessity and the Genesis growth rule is an Empirical fact.”

Importance of Origin Haas Law

(Significance of the Law of Diminishing Returns)

Origin loss law is a fundamental law of economics, so it has a wide importance in every field of economics. This rule holds its important place in pricing, quantum of production, population control, revenue and solution of land problems etc., as is evident from the following description.

(1) The population theory of Malthus is based on this rule. apart from this. The migration of population from one country to another is also affected by this rule.

(2) Ricardo’s principle of rent is also based on this rule.

(3) The principle of marginal productivity has also been created on the basis of this principle.

(4) This rule also affects the standard of living.

(5) This rule is also responsible for new innovations.
(6) This rule applies to every area of â€‹â€‹production (eg agriculture, fishing, mining, building construction etc.).

Prof. Cairnes, while clarifying the importance of this rule, wrote that “If there had not been a decline in origin, the form of political economics would have changed so completely as if human nature itself had changed.” Bcom 1st Year Assumptions of the Law of Diminishing Returns notes

Can the rule of action be postponed

(Whether the Applicability of Law be Postponed)

Prof. Marshall states – “In the production process, nature works in the direction of the Genesis Decline Rule, while man’s effort is towards achieving the Genesis growth law.” It is thus clear that the efforts of man hinder the functioning of the originating degeneration law.

Therefore, by the use of scientific inventions in the fields of agriculture, mining industry etc., improvement in agricultural method, expansion in the means of transport and communication etc., the functionality of this rule can be postponed for some time. Substantial success in this direction has also been achieved in developed countries. Thus, the operation of this rule can be postponed by human efforts, but ultimately this rule must be in the words of the working Vicsteadâ€” â€œIts functionality is universal. ”