Theory of diminishing returns
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Indicate whether each of the following statements is true or false and give the reason. (a) A firm should stop expanding output after reaching diminishing returns and (b) if large and small firms operate in the same industry, we must have constant returns to scale.
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Theory of diminishing returns
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a) False,
a firm should stop expanding output when marginal revenue = marginal cost.
b) Not always true.
Consider an economy of ...
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