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Use the information from the completed table and the graphs to identify the three stages of production and explain why the firm’s short run production has only one ‘rational’ stage of production. The three stages of production are identified by marginal product of the stage. In the first stage the marginal product is positive and enlarging, where output is increases at a steady rate occurs from zero to 10 workers. In the second stage the marginal product is also positive but is declining, where output increases at a decreasing rate. It occurs after the tenth worker, and is indicted by the decline in average product. This is the point where the MP and AP curves cross up to the point where marginal product becomes negative.Finally, in the third stage the marginal product is negative, where there marginal equals zero or less thereof. Notice, after the 15th worker, there are too many workers to operate efficiently so there is a reduction in output. The three stages are also identified in terms of the shape and the slope of the total product curve. In the first stage there is a positive slope which is increasing, in the second stage there is a positive slop that is declining and in the third stage there is a negative
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Observe in the table and graphs above, stage І. there is increasing marginal returns, stage ІІ there is decreasing marginal returns, and stage ІІІ there is a negative marginal return. As the short run production generally having a fixed capital and labor varies with output. It is evident that stage І’s labor makes more complete use of fixed capital there is increasing marginal returns therefore it is a rational stage of production. During stage ІІ of production more than optimal level of labor is applied to the same capital leading to decreasing marginal returns. This is not a rational stage of production. Lastly, stage ІІІ there is application of the law of diminishing marginal returns thus, the marginal product decreases so much that it becomes negative (MP-21). This stage is not rational, at this stage the firm would need to reduce labor in order to increase
Observe in the table and graphs above, stage І. there is increasing marginal returns, stage ІІ there is decreasing marginal returns, and stage ІІІ there is a negative marginal return. As the short run production generally having a fixed capital and labor varies with output. It is evident that stage І’s labor makes more complete use of fixed capital there is increasing marginal returns therefore it is a rational stage of production. During stage ІІ of production more than optimal level of labor is applied to the same capital leading to decreasing marginal returns. This is not a rational stage of production. Lastly, stage ІІІ there is application of the law of diminishing marginal returns thus, the marginal product decreases so much that it becomes negative (MP-21). This stage is not rational, at this stage the firm would need to reduce labor in order to increase