Explain How a Firm Can Have Constant Returns to Scale

question 107

Essay

Explain how a firm can have constant returns to scale in production and economies of scale in cost.

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Definitions:

Expected Frequency

The number of occurrences of an event expected in a study based on a probability model.

Sample Size

The number of observations or subjects used in a study or experiment, which represents a portion of the population being studied.

Test Statistic

A value calculated from sample data used to determine whether to reject the null hypothesis in a statistical test.

Critical Value

A threshold value in hypothesis testing that defines the boundary for rejecting the null hypothesis; it depends on the chosen significance level.