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The marginal product of an input factor initially rises with its employment level and then, after a certain level of employment, it starts falling. this is known as:

Solution

✅ Correct Option: 4

When one input is increased keeping others fixed, its marginal product first rises and then, beyond a certain employment level, falls. This behaviour of marginal product is called the law of variable proportions, also known as the law of diminishing marginal product.

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