The correct answer is: 3, 1, 2.
Increasing returns are the first stage of production, where the output increases more than proportionately to the increase in inputs. Diminishing returns are the second stage of production, where the output increases less than proportionately to the increase in inputs. Negative returns are the third stage of production, where the output decreases as the inputs increase.
Increasing returns occur when there are economies of scale. This means that the cost of producing each additional unit of output decreases as the total output increases. This can happen for a number of reasons, such as when there are fixed costs that do not change as the output level changes. For example, a company may have to spend a certain amount of money on research and development, regardless of how many units of its product it produces. Once the research and development is done, the company can produce additional units of its product at a lower cost.
Diminishing returns occur when there are diseconomies of scale. This means that the cost of producing each additional unit of output increases as the total output increases. This can happen for a number of reasons, such as when there is a lack of coordination between different parts of the production process. For example, a company may have a number of different departments, such as marketing, sales, and manufacturing. If these departments are not well-coordinated, it can lead to delays and inefficiencies in the production process.
Negative returns occur when the cost of producing each additional unit of output is greater than the revenue generated from selling that unit of output. This can happen for a number of reasons, such as when the market for the product is saturated. For example, a company may produce a product that is no longer in demand. In this case, the company may have to sell the product at a loss in order to get rid of it.
In conclusion, the correct answer is: 3, 1, 2. Increasing returns occur first, followed by diminishing returns, and finally negative returns.