Question

Why does the third stage of negative return come?

Answer 1

Answer:

The excessive addition of variable inputs leads to negative returns at this stage. This is because of the crowding of the variable factors. The variable and fixed factors now start getting into each other's ways. Effectively, there is no coordination and hence the output falls.

Answer 2

In the third stage, negative returns come because there is no coordination between variable and fixed factors as a result output is falls.

What is the third stage of the law of Diminishing margin returns?

• In this stage additional variable factor responsible for a negative result
• The marginal product results negative
• The coordination between fixed and variable factors is poor in this stage
• The third stage starts when the total product curve is in maximum point
• The total product curve gets decreased in this stage