Column A (Laws) Column B (Descriptions) A. Law of Demand 1. After a certain point, increasing input leads to declining marginal product. B. Law of Diminishing Marginal Product 2. Demand and price move in opposite directions when income increases. C. Law of Variable Proportions 3. Marginal product initially rises with input usage, then falls.
A-2, B-1, C-3
Economic Laws and Descriptions Matching
This section provides a detailed explanation to match the economic laws listed in Column A with their respective descriptions from Column B.
Understanding the Laws
The task is to correctly pair each economic law from Column A with its accurate description provided in Column B.
A. Law of Demand
The Law of Demand is a fundamental economic principle that describes the relationship between the price of a good or service and the quantity demanded by consumers. It posits that, holding all other factors constant (ceteris paribus), as the price of a good rises, the quantity demanded decreases, and conversely, as the price falls, the quantity demanded increases. This indicates an inverse relationship.
Description 2 states: "Demand and price move in opposite directions when income increases." While this phrasing is slightly complex by including the factor of income, it effectively points towards the core concept of the Law of Demand – the tendency for price and demand quantity to move in opposite directions.
Thus, A corresponds to 2.
B. Law of Diminishing Marginal Product
This law focuses on the concept of marginal product in production. It states that as you add more units of a variable input (such as labor) to fixed inputs (like machinery or land), there will come a point after which each additional unit of the variable input will yield a smaller increase in total output compared to the previous unit. Essentially, the marginal product eventually declines.
Description 1 states: "After a certain point, increasing input leads to declining marginal product." This description accurately captures the essence of the Law of Diminishing Marginal Product.
Thus, B corresponds to 1.
C. Law of Variable Proportions
Also known as the Law of Variable Returns or the Law of Returns to a Variable Factor, this principle examines the relationship between inputs and outputs in the short run, where at least one factor of production is fixed. It explains how the marginal product of a variable input changes as more of that input is added. Typically, the marginal product initially increases due to specialization and efficiency, reaches a maximum, and then begins to decrease as the variable input becomes too numerous relative to the fixed inputs.
Description 3 states: "Marginal product initially rises with input usage, then falls." This statement precisely describes the typical pattern of marginal product outlined by the Law of Variable Proportions.
Thus, C corresponds to 3.
Summary of Correct Matches
Based on the analysis of each law and its description, the correct pairings are:
- A - 2
- B - 1
- C - 3
These matches align with the standard definitions and applications of these fundamental economic principles.
Similar Questions
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- What does the 'invisible hand' concept, as proposed by Adam Smith, primarily signify?
- The concept of "opportunity cost" in economics refers to:
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Important Questions from Microeconomics
Which of the following statement is correct?
I. Indifference curves are sloping from left to right.
II. Higher indifference curve gives a higher level of utility.
If in a production process, all inputs are tripled, which of the following statements follows?
I. If the output is tripled, then decreasing returns to scale apply.
II. When the output is doubled, constant returns to scale apply.
III. If the output is more than tripled, then increasing returns to scale apply.
A market, in which there are a large number of firms, homogeneous product, infinite elasticity of demand for an individual firm and no control over price by firms, is termed as________.
If the two goods are substituted, then the indifference curve will be:
The government multiplier is given by (where c = MPC and t = tax rate)
