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The theory of marginal productively is based on certain assumption these assumptions are as follows:-
Each unit of a factor of production should be uniform and should also be substitutable for the other. In other words, it is assumed that all the units of a factor of production have the same qualities , productive abilities etc, and have no difference whatever: if this is so only then it will be possible to substitute one unit of the factor for another unit
One factor is completely substitutable for the another, that is the use of one factor can always be increased by reducing the use of another factor. This is necessary so that the marginal productivity can be found by increasing or decreasing the quantities of the factors employed.
It should be possible to make a change in the quantities of the factors of production and this change should not seriously disturb the entire production. This change is necessary in order to find out the marginal productivity of the factors. Every factor of production should be completely mobile. It should be possible for each factor of production to move from one organization to another.Production should be achieved under conditions of diminishing returns.
Each unit of a factor of production should be uniform and should also be substitutable for the other. In other words, it is assumed that all the units of a factor of production have the same qualities , productive abilities etc, and have no difference whatever: if this is so only then it will be possible to substitute one unit of the factor for another unit
One factor is completely substitutable for the another, that is the use of one factor can always be increased by reducing the use of another factor. This is necessary so that the marginal productivity can be found by increasing or decreasing the quantities of the factors employed.
It should be possible to make a change in the quantities of the factors of production and this change should not seriously disturb the entire production. This change is necessary in order to find out the marginal productivity of the factors. Every factor of production should be completely mobile. It should be possible for each factor of production to move from one organization to another.Production should be achieved under conditions of diminishing returns.
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