Final answer:
It is true that in a constant-cost industry characterized by constant returns to scale, firms of varying sizes can coexist and be equally profitable. Supply is very elastic, and input costs remain stable despite market demand changes.
Step-by-step explanation:
In an industry with an extended range of constant returns to scale, the statement that firms of varying sizes can coexist and be equally profitable is true. This occurs in a constant-cost industry, where the supply curve is very elastic, and there is a perfectly elastic supply of inputs. Firms in such industries can respond to increased market demand without a corresponding increase in costs. This results from the ability to hire more employees without increasing wages or acquiring other inputs without raising their prices, which keeps the long-run market price stable despite shifts in supply and demand.
Agricultural markets are often cited as examples of constant-cost industries. Here, a significant rise in the demand for one product, such as ethanol which leads to increased corn production, does not result in higher overall production costs, allowing different-sized firms to remain profitable even as the market dynamics shift.