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1. Define the concepts of constant returns to scale (CRS). 2. Why is it sensible to assume that the production function exhibits constant returns to

1. Define the concepts of constant returns to scale (CRS).

2. Why is it sensible to assume that the production function exhibits constant returns to scale? Can you give a reallife example?

3. Explain the concept of diminishing marginal returns to capital. Why does it make economic sense to assume that the production function exhibits diminishing marginal returns to capital?

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