Agricultural Economics - Study Mode

Explanation

Solution: The marginal physical product (MPP) of a variable input becomes negative in the short run when the law of diminishing returns sets in. This typically occurs in the 2 nd stage and continues into the 3 rd stage. In the short run, as more of a variable input (like labor) is added to a fixed input (like land), the additional output (marginal product) may initially increase but eventually starts to decrease, leading to a negative marginal physical product. Therefore, in this context, the correct option is Option D: In 2 nd and 3 rd stages .