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Abstract

Economies of size refers to the relative cost efficiency associated with different firm sizes. As farm size increases in most field crop regions, per-unit costs decline at first and then are relatively constant. Medium-size commercial farms ($41,000 to $76,000 gross income) achieve most available technical cost efficiencies. Society would likely benefit little in terms of lower real food costs from further increase in the size of these farms. Apparently economies of size are not a major factor in farm enlargement; farmers expand their farms to increase income rather than to reduce per-unit costs.

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