The document discusses the law of returns, which governs production. There are two types of laws of returns: 1) The law of variable proportions, also known as the law of diminishing returns, states that as increments of a variable input are added to fixed inputs, marginal product will eventually diminish. 2) The law of returns to scale analyzes production in the long run. The law of variable proportions includes three stages: increasing returns initially as organization improves, then diminishing returns as marginal product declines, and finally negative returns. The law is illustrated with a graph analysis of stages of production.