Why have many family farms in North America been replaced by agribusiness farms since the 1980s?

• A. Family farms have received more government subsidies than agribusiness farms, making them less competitive.
• B. Family farms have increased their market share by specializing in organic products.
• C. Agribusiness farms benefit from economies of scale, allowing them to produce at lower average costs than family farms.
• D. Agribusiness farms are less efficient than family farms, leading to higher prices for consumers.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of economies of scale, which refers to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.
2. Step 2: Recognize that agribusiness farms are typically larger in size compared to family farms, allowing them to spread fixed costs over a larger quantity of output, thus reducing average costs.
3. Step 3: Analyze how lower average costs enable agribusiness farms to be more competitive in the market by offering products at lower prices or achieving higher profit margins.
4. Step 4: Contrast this with family farms, which are generally smaller and may not benefit as much from economies of scale, leading to higher average costs and less competitive pricing.
5. Step 5: Conclude that the replacement of many family farms by agribusiness farms since the 1980s is largely due to the cost efficiency and competitive advantage gained through economies of scale by agribusiness farms.