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Types of Adjusting Entries: Insurance Expense Is The Result of Paying The
Types of Adjusting Entries: Insurance Expense Is The Result of Paying The
Economic Production
These three distinct stages of short-run
production are not equally important.
Stage I, and with largely increasing
marginal returns, is a great place to visit,
but most firms move through it quickly.
Because each variable input is increasingly
more productive, firms employ as many
as they can, as quickly as they can. Stage
III, with negative marginal returns, is not
particularly attractive to firms. Production
is less than it would be in Stage II, but
the cost of production is greater due to
the employment of the variable input. Not
a lot of benefits are to be had with Stage
III.