Answer to Question #186944 in Microeconomics for baby

Question

Justify why stage/phase two of production is regarded as rational stage

Answer 1

Stage/phase two of production is regarded as rational stage because it assumes ultimate and sustainable production methods. There is positivity in marginal and average products, and labor increase leads more outputs and higher productivity levels. The first level shows increasing marginal return from additional variables but it does not portray the direction of permanent production because it needs fewer efforts. Similarly, the third stage shows frankly negative marginal return on additional variables.