 so far we have discussed a few concepts of statutory protection in the first video in this video let us discuss a few important concepts of protection namely the concept of illustrative substitution for percentage of isopoints and the law of variable proportions its various stresses and significance illustrative substitution it is basically the degree of substitutability between two inputs is control by illustrative substitution it is the proportionate sense in the ratio of the factors divided by proportional sense in the module-gradification of technical substitution M rts therefore the distribution is given as proportional sense in the ratio of the factors divided by proportional sense in M Dogs M R T s so the textured substitution varies between 0 and infinity when two factors cannot be terrorists at all that means when then illustrative substitution is 0, on the other hand illustrative substitution is infinite when the two factors are perfect substitutes that is illustrative substitution is 1, now properties of isopornex we have already discussed the concept of isopornex now let us understand some of its properties and isopornex slopes downward from left to right, it happens because when quantity of labour is increased the quantity of capital must be reduced show that there is no sense in quantity of output used now two isopornex cannot intersect each other if they intersect each other there will be common factor combination for two different levels of output this has been explained with the help of figure 7.4 in figure 7.4 you will see that output level upon a is same as output level upon c similarly output level upon b is also same as output level upon c thus output level upon a is equal to output level upon b this is completely ridiculous you will see so it can be say that two isopornex cannot intersect every isopornex is convex to the origin the convexity property of an isopornex means that as we move down on the curve less and less of capital is required to be substituted by a given increment of labour as to keep the level of output constant in other words the convexity is due to the diminishing marginal rate of technical substitution the degree of convexity of the isopornex depends on the rate at which diameter diminishes if the isopornex are connected to the origin it would mean that the marginal rate of technical substitution is increasing and more capital is replaced to get one additional unit of labour which is not the case another important properties of isopornex an isopornex moves upward to the right it represents higher levels of output that means as an isopornex moves upward to the right it will represent a higher level of output this has been shown in heganovar 7.5 here you will see that iq2 isoporne iq2 is higher level than iq1 and it represents higher level of output similarly iq3 is higher than iq2 and it represents a higher level of output than iq2 there may be a number of isopornex in between two isopornex they show various levels of output that combination of two input can produce between any two isopornex now let us discuss the concept of law of variable proportions the law of variable proportions occupies an important place in the field of production the law studies the sciences in the quantity of production when one input is variable and all other input used in production are kept constant in other words it shows how output changes which changes in the quantity of one input while other inputs are kept constant the law of variable proportions is the new name for the famous law of diminishing marginal returns diminishing returns of classical economics now is assumptions let us discuss the assumptions of this law first assumption is there should not be any sense in the state of technology the second assumption is only one input will undergo sense in quantity keeping all other inputs constant all the units of the variable factor are homogeneous and it is possible to sense the proportion in which the various inputs are combined to study the law of variable proportions let us assume that the producer will keep capital constant and increase the inputs of labor we have taken a hypothetical table let us see from table 7.3 it is clear that with the successive increase in the units of labor the marginal product of labor MPL increases for some time but with the increase in successive units MPL starts declining in this way when total product is maximum MPL becomes 0 and average product of labor APL starts declining again it can be seen that from the table 7.3 that total product is the highest when marginal productivity of labor MPL is 0 you can see it is in stage 7 that means when we are employing 7 units of labor in our example then the total product is 395 which is highest but the marginal product of labor is 0 after this point both total and average product form and marginal product of labor becomes negative it will see total product comes down to 360 and when we in case 8 units of labor and the marginal product of labor is minus 35 we can study the rise and fall of production with diagrams in 3 stages we can help take help of a diagram and we can study these 3 stages let us consider diagram 7.6 the from table 7.3 we see the behavior of output with varying quantity of labor and fixed quantity of capital the rise and fall of output can be divided into 3 stages as we have already mentioned and it will be shown in figure 7.6 now here the stage 1 is in the first stage the total output to a point increases at an increasing rate in the above in the figure 7.6 it can be seen that the total output increases rapidly up to point F this point is called the point of inflection from this point onwards in stage 1 total output increases but at a slower rate stage 1 ends at a point where average product is the maximum in this stage the quantity of the fixed factor that is capital is too much relative to the quantity of the variable factor labor so that if some of the fixed factor is withdrawn the total product will increase stage 1 is known as the stage of increasing returns stage 2 in stage 2 the total product continues to increase at a decreasing rate until it resets its maximum point H this is F2 figure 6 7.6 again where the second stage ends at the end of second stage marginal product becomes 0 this stage is known as the stage of decreasing returns as both the average and marginal product of the variable factors continuously fall during this stage stage 3 in stage 3 the marginal product becomes negative as we saw when employing 18 inches of labor the marginal product was minus 35 in the example 7.3 therefore both total product and average product declines in this stage total product curve and average product curve slopes downward and marginal product curve goes below the x axis this is the opposite of first stage in stage 3 variable factor that is labor is too much in relation to fixed factor capital this stage is called the stage of negative returns now out of this three stages irrational producer will always like to produce in stage 2 the producer will not choose stage 1 where marginal product of fixed factor is negative if he suggests this stage he will not be utilizing completely the opportunity of production by increasing variable factor irrational producer will never choose stage 3 also because in this stage he can always increase output by reducing the quantity of variable factor whose quantity is excess in production of fixed factor even when the variable factor is free the rational producer will stop at the end of seven states now let us discuss the significance of this law of variable proportions the law of variable proportions is very important in the field of economics till marshal it was believed that the law was applicable in the field of economicality but a modern economist propound that the law is equally applicable to industries and other productive activities if the law actually does not occur we can produce any amount of food grain in a small size of holding by using more and more amount of labor and capital but in spite of the presence of the law of variable proportions a country like India need not be pessimistic where there is tremendous pressure of population and agriculture production is not sufficient productivity in the field of agriculture can be increased by making advancement in technology to avoid food crisis so this is the end of this video session and in the next video we will be again discussing some of the remaining concepts of this unit number 7 starting with itas to scare thank you