12.

State different phases of the law of variable proportions on the basis of total product. Use diagram.
Or
Explain the geometric method of measuring price elasticity of supply. Use diagram.

Law of variable proportion:

Law of variable proportion states that as more of the variable factor input is combined with the fixed factor input, a point will eventually be reached where the marginal product of the variable factor input starts declining.

Stage I: As more units of factor input are used, the total product increases at an increasing rate which is called increasing returns to the factor input.
Stage II: However, when the 4th unit of factor input is used, the diminishing returns sets in, where TP increases at a decreasing rate.
Stage III: TP starts declining from 34 to 10 when the 9th unit is employed

or, 

Geometric method measures elasticity at a given point on the supply curve and is also know as ‘Arc method’ or Point method’. this method is a graphical presentation of the elasticity of the supply.  the degree of the price elasticity of supply depends on the slope and origin position of the supply curve. There are five possible situations in the elasticity of supply curve. 

(a)unitary elasticity of supply (E=1) : where if the straight line supply curve originates from the origin, then the angle of inclination of supply curve, the elasticity of supply will always be equal to one i.e E=1 this supply curve is called unitary elastic supply curve.



(b)less elastic supply (E<1) where if the supply curve originates from the horizontal intercept of quantity axis, then the angle of inclination of supply curve, the elasticity of the supply curve will be less than one i.e (E<1).



(c) more elastic supply (E>1) the more elastic supply curve originates from the vertical intercept of price axis. the value of elasticity of supply originates from the vertical intercept is greater than one i.e (E>1)