Question

In which a producer will stop his production?


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Answer 1

Explanation:

A producer, thus, can always increase his output by reducing the units of the variable factor. Thus, a producer would wish to produce in stage 2 where both, the marginal product and average product of the variable factors are diminishing. Stage 2 represents the range of rational production decisions.

Answer 2

Explanation:

A producer, thus, can always increase his output by reducing the units of the variable factor. Thus, a producer would wish to produce in stage 2 where both, the marginal product and average product of the variable factors are diminishing. Stage 2 represents the range of rational production decisions.