Q.71
Agricultural Economics- ICAR JRF/SRF 2024
MCQ (Single Correct)
Which of the following is irrational zone of production?
EXPLANATION
Microeconomics: Consumer Choice, Indifference Curves, Elasticities, Production Costs & Market Structures
- Three Stages of the Classical Production Function:
- Stage I (Irrational Zone): Extends from the origin to the point where Average Physical Product ($APP$) reaches its maximum ($MPP = APP$). Here, $MPP \gt APP$ and elasticity of production $E_p \gt 1$. Fixed resources are underutilized; adding variable inputs increases average efficiency. A rational producer will not stop producing in this stage.
- Stage II (Rational Zone): Extends from the maximum of $APP$ ($E_p = 1$) to the maximum of Total Physical Product ($TPP$, where $MPP = 0$ and $E_p = 0$). Here, $MPP$ and $APP$ are both positive and declining ($0 \le E_p \le 1$). This is the only economically rational stage to operate.
- Stage III (Irrational Zone): Begins beyond the maximum of $TPP$, where $MPP \lt 0$ and $E_p \lt 0$. Total output decreases with additional input application. Applying more variable input actively destroys output.
- Conclusion: Both Stage I and Stage III are irrational zones of production, corresponding to Option 4.
Correct option: (4) 1 & lll zone
Explanation not matching this question?
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