Economic theory provides insights into the range of possibilities for cost relationships.Studies such as those by Blinder et al.provide insights into where,within that range,many firms operate.Thus,there is no real conflict between theory and reality,as some people might try to claim.

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Economic theory provides general insights and frameworks for understanding cost relationships, and empirical studies can provide evidence for where firms tend to operate within those frameworks. There is no inherent conflict between theory and reality, as they can inform and build upon each other.

Economic Theory Provides Insights into the Range of Possibilities for Cost