Meticulously difine the terms:
1. Aggregate demand
2. Aggregate supply
3. Economies of scale
3. Diseconomies of scale
4. Constant returns to scale
1. Aggregate demand: The total demand for goods and services within an economy at a given price level and in a given period of time. It is the sum of all personal consumption expenditures, business investments, government spending, and net exports.
2. Aggregate supply: The total supply of all goods and services produced within an economy at a given price level and in a given period of time. It represents the total amount of goods and services that firms are willing and able to produce at different price levels.
3. Economies of scale: The cost advantages that a business can achieve by increasing the scale of production, leading to a decrease in average cost per unit. This occurs when the fixed costs are spread over a greater number of units, resulting in efficiencies in production and distribution.
4. Diseconomies of scale: The opposite of economies of scale, diseconomies of scale refer to the increase in average costs per unit as the scale of production increases. This can occur due to inefficiencies in coordination, communication, or management as a business grows too large.
5. Constant returns to scale: A production process in which output increases in proportion to the increase in inputs, resulting in constant average cost per unit. This means that doubling all inputs would lead to a doubling of output and costs, maintaining the same level of efficiency in production.