Differentiate between returns to factor and returns to scale, Business Economics

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QUESTION

a) Differentiate between returns to factor and returns to scale.

b) In the long-run the Average Cost Curve is u-shaped. Discuss

c) Whenever a firm is making losses it should close down. Do you agree with this statement? You may use mathematical examples to illustrate your answer.

d) Discuss how resource allocation is dictated by consumers' preferences in the market place.


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