Question

In which stage of production is the rational producer produces? Why?

Answer 1

Answer:

A producer thus can always increase his output by reducing the units of the variable factor

Answer 2

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.