What Are the Three Stages of Production in Economics?

By Staff WriterLast Updated April 17, 2020

In economics, the three stages of production are increasing average product production, decreasing marginal returns and negative marginal returns. These stages of production apply to short-term production of goods, with the length of time spent within each stage varying depending on the type of company and product.

During the first stage of production, the total product curve always has a positive slope, with marginal product always being initially greater than average product. However, the two product lines meet and become one as the first stage ends. Stage two of the production curve typically features decreasing positive marginal returns, before becoming negative as it enters stage three.