ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A rational producer aims to operate in second phase as total product is maximum and marginal product of each variable factor is positive. This is known as the stage of diminishing returns. Hence, correct answer is option C.

Detailed explanation-2: -Any rational producer avoids the first as well as third stages of production. Therefore, producers prefer Stage II – the stage of diminishing returns. This stage is the most relevant stage of operation for a producer according to the law of variable proportions.

Detailed explanation-3: -Stages of Law of Variable Proportion Second Stage or Stage of Diminishing Returns: In this stage, the total product increases at a diminishing rate until it reaches the maximum point.

Detailed explanation-4: -The second stage of production is the most rational stage to produce for the producer because, in the first stage, the production tends to increase at an increasing rate, which means the producer will tend to increase the total output at a increasing rate.

Detailed explanation-5: -Stage II is the stage of diminishing returns. Stage II of production begins at the point where the average and marginal products are equal. Q. “Whenever marginal product is equal to average product, total product is at its maximum."