Ok thanks. So there should not be any problems if I edit clips of different specifications(i.e. frame rates, file extensions, file size, etc)?

Well sir, that is an entirely different can of worms.

If you will post all of your source resolutions, frame rates, interlace status, and intended use, then we can help guide you to the least destructive output settings, and point out the trouble spots. Setting the output to the lowest source resolution (not file size) is a good start, and thanks for not expecting miracles from the software.

Then, you can feel free to explore the effects of convenience switches in both the Project, Preview, and Render controls. Glad to help, but please don't post details from memory, which usually sucks.

https://www.vegascreativesoftware.info/us/forum/faq-how-to-post-mediainfo-and-vegas-pro-file-properties--104561/

"I usually select a the video clip of the smallest file size to set the project media settings...

...However does the clip file size really matter?"

File size of the source media doesn't have anything to do with anything.

The order of parameters that should concern you:

Descending

1) Frame rate

2) Frame rate mode (Constant or variable)

3) Interlaced (field order) or non-interlaced

4) Video and audio codecs

5) Pixel dimensions

6) Pixel aspect ratio

Here are my the specifications for my video input,

Resolution: 1920 x 1080

FPS: 24P

Scan type progressive

I usually like to render the video to 24p mp4. However all I wanted to know is can I place clips of different frame rates and scan types on the same timeline and expect finish video to render to the same scan type and frame rate, with out causing any problems.

"...can I place clips of different frame rates and scan types on the same timeline and expect finish video to render to the same scan type and frame rate, with out causing any problems."

More often than not, Yes. Depending on the combinations, you may have to look closely at Resample, Deinterlace Method and/or Field Order. Follow Musicvid's advice and post details about your specific media for a specific answer.

Ok thanks.

When you honor one input format, others may take a hit that you may or may not be able to live with.

When you've tested the effect of the project and render "adjust source" switches for yourself, please take a moment to post your results back in this thread. Thanks.

Quite a coincidence, this thread.  Two days ago I came across a home movie event I did in 2010.
I probably did it in "Nero", no Vegas yet, got that in 2014 v13.
Looking at the Three! output files, finished in various resolutions and file extensions I guess
that I had similar problems on deciding what's what Re: how to handle two different sets of source files.

I had used a Canon pocket camera, Ixus 50, 640x480 30fps video and Canon 5D Mk. II FHD, 25fps.
The stills were also different aspect ratio. I live in PAL land so previously one of the 3 output files I chose was 25fps, 720x576, but now I realize this was just wrong.

So armed with my VP15 I decided to redo the project, about 26 minutes, I still had all of the source material.

The most important decision was in getting it right this time as to the best/correct output format.
The project had a lot more Ixus stills and video than the 5D II so I elected to set project properties to 640x480 and 30fps. (not 29.97). I had the clever idea of rendering out to a higher resolution, double 640x480, 1280x960.

Completed the project this evening and played back some.  Luckily I played enough to discover an issue.
After playing for roughly 20-30 seconds the bottom of the screen had issues, sort of break-up. 
If I closed and reloaded at the same problem point in the video the issue was gone but would still reappear later at a different location. It seems to be a cumulative issue of some sort.

Anyway it went away once I rendered out to 640x480 instead of 1280x960.  Note that changing the project properties to 1280x960 didn't solve anything, and all of the other things I tried first didn't solve it either!

The line across the bottom and darkening is just when the vlc player is put in pause, ignore that, but you can see that the white garment is displaced to the left, maybe from a previous, next frame.

Update .. I found that I could render aok to 1280 x 960 using the Magix Nvenc and the Sony avc encoders. I also rendered out aok to 1280 x 960 using the Magix Hevc encoder, software only.

So the Magix avc encoder may have problems upscaling the resolution in this way.