Economics · Production Theory

Which of the following statements are TRUE regarding the relationship between Average Product (AP), Marginal Product (MP) and the stages of production in the short run? A. Stage I of production ends where AP is at its maximum, i.e., where AP = MP. B. Stage II (rational stage) lies between the points where AP is maximum and where TP is maximum (MP = 0). C. In Stage III, Total Product (TP) is falling and Marginal Product is negative. D. When MP > AP, the AP curve is rising; when MP < AP, the AP curve is falling. E. A profit-maximising firm under perfect competition will always operate in Stage II.