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Review_Question_15 - 15 Define the 3 stages of production...

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15.) Define the 3 stages of production and illustrate them with the aid of an isoquant diagram. Stage I: Increasing marginal returns to labor: Range of input usage over which marginal product increases. where AP L and MPP L intersect Stage II: Decreasing (Diminishing) marginal returns: Range of input usage over which marginal product declines but is still positive. Stage II ends when MPP L is at zero, and AP L is declining. Stage III: Negative Marginal Returns: Range of input usage over which marginal product is negative.
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