Why have many family farms in North America been replaced over time?

• A. Because family farms have higher profit margins than large agribusinesses.
• B. Because family farms have unlimited access to government subsidies.
• C. Because large-scale commercial farms benefit from economies of scale, making them more competitive.
• D. Because family farms produce more output per acre than commercial farms.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of economies of scale. Economies of scale occur when increasing the scale of production leads to a lower average cost per unit of output. This means larger farms can produce goods more efficiently and at a lower cost than smaller farms.
2. Step 2: Recognize that large-scale commercial farms can spread fixed costs (such as machinery, technology, and management) over a greater quantity of output, reducing the average cost per unit compared to smaller family farms.
3. Step 3: Analyze how this cost advantage allows large agribusinesses to be more competitive in the market, often enabling them to offer lower prices or invest more in technology and marketing.
4. Step 4: Consider the limitations faced by family farms, such as smaller production scale, less access to capital, and higher per-unit costs, which can reduce their profitability relative to large commercial farms.
5. Step 5: Conclude that over time, the competitive advantage from economies of scale has led to the replacement of many family farms by large-scale commercial farms in North America.