Question

Theory of Production Problem #4: • Define the three stages of production for labour in problem #2.

Answer 1

PROBLEM 4% In short run there are three stage of production for labor — (i) Ist stage - Stage of increasing sceton (11) 2nd stage - Stage of decreasing or diminišning retebin. (11) god stage - Stage of negative rétion.

In Ist stages le stage of increasing retur. marginal product of labor is increasing and thus total product increases at Las_increasing rate. In and Stage le stage of diminishing return the marginal product of labor is decreasing but remains positive AS a result the total procluct of labor also increases but at a decreasing rate 30d Stage ine Stage of negative retwin the marginal product of labor become negative as a result the total product starts decreasing . The end of and stage and start of 3rd Stage is the point where total product attains its maximum. Figure, MP marginal Product. maximum of TA MP STP TP Total product 2 hari + - Labor →