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At which point in the stages of production does the maximum profitable number of workers become the most apparent?

a) Stage 1
b) Stage 2
c) Stage 3
d) Stage 4

User Beiller
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1 Answer

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Final answer:

The maximum profitable number of workers is most apparent in Stage 2, where a company hires enough workers to maximize output before diminishing returns set in.

Step-by-step explanation:

At which point in the stages of production does the maximum profitable number of workers become the most apparent? The answer is Stage 2. During Stage 1, the company is not using its resources to the fullest capacity and experiences increasing returns with each extra worker. However, Stage 1 ends as soon as the company realizes that adding more workers increases output. At this point, the company enters Stage 2, where it hires more workers and production output continues to rise, albeit at decreasing increments. While output is still increasing, the firm is seeing diminishing returns. In this stage, the profit-maximizing number of workers is at the point where the marginal revenue product equals the market wage. This is because the company is maximizing output efficiently for the least amount of money before hitting Stage 3, where the marginal returns become negative due to too many workers leading to a decrease in total factory output.

User Nikhil Ghuse
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