Question

Explain with diagram the three stages of production

Answer 1

Hello Mate,

1÷ Stage one is the period of most growth in a company's production. In this period, each additional variable input will produce more products. This signifies an increasing marginal return; the investment on the variable input outweighs the cost of producing an additional product at an increasing rate. As an example, if one employee produces five cans by himself, two employees may produce 15 cans between the two of them. All three curves are increasing and positive in this stage.

Answer 2

The Three stages of production are defined by the slopes, shapes, and interrelationships of the total, marginal and average product curves.

• The First Stage of production is depicted by a positive slope of the average product curve, ceasing at the intersection between the average product and marginal product curves. In stage one, the average product is positive and continues to increase.

• The Second Stage of production continues up to the point where the marginal product will become negative, at the peak of the total product curve. In stage two, the marginal product is positive but keeps on diminishing

• The Third Stage of production prevails over the range where the total product curve is negatively sloped and in Stage three total product is diminishing.

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