What Is The Importance Of Production Stages?


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Muhammad Abdullah786 Profile
The purpose of each ration rational producer is to maximize its output or minimize its costs of production. Therefore, the firm which is to produce with the help of labor will not employ those units of labor having negative MP. Accordingly stage three will be an uneconomic stage for the producer. Therefore the producer will not employ any unit of labor corresponding to stage three.

Again the stage one is not also an economically efficient stage. Although both AP and MP are rising. Yet this stage indicates that the fixed factors is enough big and has not been fully utilize. Accordingly the MP of labor is increasing. If the employment of labor is toped here it would mean the losing of the gains which could be raped through rising of MP.
All this concludes that it is stage 2 in connection with the employment of labor. This is accorded as most beneficial from economic point of view. Although here both NP and AP are decreasing, yet they are positive. In this stage how many units of labor the firm will employ this is concerned with the behavior of the firm which will be explained in the presence of firms budget and prices of factors of production.

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