Q:Explain 'Fixity of the Factor' as a reason of diminishing returns to a factor.

(Experts, is it really a reason of diminishing returns to a factor???, i am in doubt , please guide.)

Fixity of the factor indicates a situation, where the amount of fixed factor is inadequate (or less than) the amount of variable factor. Suppose there is only one machine. Initially, as we go on increasing the number of labour, then the marginal product will continue to increase. Say, four labour is just appropriate to use this machine fully. But, if we go on increasing the number of labour beyond 4, say 5 or 6 labours, then the machine is not getting utilised fully (indeed overutilised). This adds on to the cost of operating that machine- say more amount of depreciation, wear and tear and repair costs. Besides this, the additional two labours (in excess of 4) are not optimally utilised, but they add on to the overall cost of production. Hence, you see the cost of production increases, whereas, the corresponding benefits fetched are falling. This is why, this reason is regarded as one of the causes of diminishing returns to a factor (negative returns).

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