Define increasing returns to scale

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Question 1: If Americans can produce both agricultural and industrial products with less effort and fewer raw materials than Mexicans can, then United States will gain if it decides to engage in trade with Mexico. TRUE or FALSE, Explain.

Question 2: Define increasing returns to scale and explain briefly with graphical illustration why it is cost-effective to expand production if a firm's production function exhibits increasing returns to scale.

Reference no: EM132471537

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