Laws of Return: Law of increasing return

Every new business has to apply three laws in the production process. These three laws depend upon different conditions. Following are the laws:

  1. Law of increasing return
  2. Law of constant return
  3. Law of decreasing return.

Law of Increasing Return:

This law can be defined as “Other things remain same, if the marginal production of a good increases due to the increase in the variable factors of production” or in other words we can say that if increase in factors of production cause an increase in marginal production of a good than it will be known as law of increasing return.

In the schedule shown, it is assumed that land is a fixed factor having quantity of 1 acre.table of law of increasing returnlaw of increasing return
We can see that cost/wage of labor is shown constant at 100. So, increasing the number of units will increase the marginal productivity.


Following are the conditions which are assumed in this law:

  1. The units of variable factors of productions must be of same quality.
  2. The units of variable factors of production should be available according to the need.
  3. Fixed factors of production should remain constant.
The methods of production of a good should remain constant.


Share this



About Us

Guidanceportal is a place to learn “the Knowledge” not mere information. Our vision is to spread knowledge of different fields of study and provide guidance in the most simplest and self explanatory way. Our team consists of skillful personnel working in different fields of life who share their practical experience and knowledge.

We understand the importance of continuous refinement & improvement thus your participation in the form of comments will be highly appreciated.

Guidanceportal Team