Question

A rational produce will operate in which of the three stages of production:

Options

• stage 1

• stage 3

• stage 2

• none of these

Answer 1

stage 2

Explanation:

A rational producer operates in Stage 2 of the law of variable proportions because in this stage, total product is increasing and marginal product is positive but diminishing.
This is the economically efficient zone where each input contributes to output but with decreasing returns.