Three stages of short-run production:
Production of automobiles involves three main stages in the short-run production process.

1. Stage 1: Increasing Returns to Scale
- In this stage, the production of automobiles increases at a faster rate as more variable inputs (such as labor and raw materials) are added to the fixed inputs (such as machinery and factory space).
- Initially, there is an increase in output with each additional unit of variable input, leading to economies of scale.
- This stage is characterized by efficient utilization of resources and increased productivity.

2. Stage 2: Diminishing Returns to Scale
- As production continues to increase, there comes a point where the marginal product of each additional unit of variable input diminishes.
- This stage signifies that the fixed inputs are being stretched beyond their optimal capacity, leading to inefficiencies in production.
- The cost of production starts to increase as more variable inputs are added to the fixed inputs.

3. Stage 3: Negative Returns to Scale
- In this final stage, adding more variable inputs actually leads to a decrease in output.
- This is because the fixed inputs are now overburdened and cannot support the additional variable inputs effectively.
- Production becomes inefficient, and the cost per unit of output increases significantly.

Fixed and variable inputs in automobile production:
- Fixed inputs in the production of automobiles include machinery, factory space, and equipment that cannot be easily changed in the short run.
- Variable inputs in automobile production include labor, raw materials, and energy that can be adjusted in the short run based on production needs.
- The optimal combination of fixed and variable inputs is crucial in maximizing the efficiency and productivity of automobile production in the short run.