One of the assumptions of classical theory of international trade is constant returns to scale but most production activities face decreasing returns to scale. Explain the difference between these concepts using a production function.

One of the assumptions of classical theory of international trade is constant returns to scale but most production activities face decreasing returns to scale. Explain the difference between these concepts using a production function.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter19: International Trade

Section: Chapter Questions

Problem 3QFR

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