The second stage of the production process in the short-run is characterized by

Question

BlackTom AI · Accepted Answer

Question restatement: The second stage of the production process in the short-run is characterized by
Options:
- A) Declining, but positive marginal product
- B) Increasing average cost
- C) Increasing marginal product
- D) Negative marginal product

Option 1: Declining, but positive marginal product
This option aligns with the classic description of Stage II in the short-run production framework. In Stage II, firms experience diminishing marginal returns: each additional unit of input adds less to total output than the previous unit, so marginal product is positive but decreasing. The total product is still rising, but at a slower rate, reflecting the diminishing (positive) marginal product. This matches the standard model where MP > 0 but MP is falling.

Option 2: Increasing average cost
While average cost curves interact with changes in marginal product, Stage II is defined primarily by the behavior of marginal product (positive but decreasing). It is not a defining feature to claim that average cost is increasing here; ATC/AVC behavior depends on other cost and output relationships and is not the hallmark characteristic of Stage II. This statement is therefore not the canonical description of Stage II.

Option 3: Increasing marginal product
This would describe Stage I, where marginal product is increasing as more inputs are added, due to increasing efficiencies or division of labor effects. In Stage II, marginal product is not increasing—it is decreasing—so this option is incorrect.

Option 4: Negative marginal product
A negative marginal product would imply that adding more input reduces total output, which would occur in a later stage (beyond Stage II) when overutilization of inputs leads to a drop in overall production. In Stage II, MP remains positive, so this option is incorrect.

Summary: Only Option 1 correctly describes Stage II as having a declining yet positive marginal product, while Options 2, 3, and 4 describe other possible behaviors that do not characterize Stage II in the standard short-run production framework.

The second stage of the production process in the short-run is characterized by

View Explanation

Log in for full answers

Similar Questions

When a factory is operating in the short run,

In economics, the short-run refers to the time period when

In the short run

A basic assumption of the short run is that a firm:

In a consumer society, many adults channel creativity into buying things

Economic stress and unpredictable times have resulted in a booming industry for self-help products

People born without creativity never can develop it

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler