Match the column with their descriptions:
List-I (Economic Laws) List-II (Core Principles / Explanations)
A. Law of Demand 1. Marginal product first increases and then decreases when one input is varied while keeping others fixed.
B. Law of Diminishing Marginal Product 2. Price and quantity demanded move in opposite directions, assuming ceteris paribus.
C. Law of Variable Proportions 3. Beyond a certain point, employing additional units of a variable input results in a decline in the additional output.
Show answer & explanation
Correct answer: D
Explanation
Answer: A-2, B-1, C-3
Explanation:
A. Law of Demand → 2
The Law of Demand states that price and demand move in opposite directions.
When price increases, demand falls and vice versa.
B. Law of Diminishing Marginal Product → 1
After a certain point, adding more units of input leads to falling additional output (marginal product).
C. Law of Variable Proportions → 3
It explains that when one input is varied while others are fixed, marginal product first increases, then decreases.
Thus, correct matching is A-2, B-1, C-3.
Additional Key Points:
These laws are part of microeconomics (production and demand theory)
They help explain:
consumer behavior (demand law)
production efficiency (variable proportions)
Marginal analysis is key in economic decision-making
Law of Demand assumes ceteris paribus (other things constant)
Potential Exam-Oriented Questions & Answers:
Question: What is marginal product?
Answer: Additional output from one extra unit of input
Question: When does diminishing marginal product occur?
Answer: After optimal input level is reached