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Larger commercial farms, however, can produce on a much larger scale and will often be able to benefit from economies of scale. Economies of scale occur when the average cost of producing a larger quantity is lower than the average cost of a smaller quantity. This can be seen on the long-run average cost (LRAC) curve below:
[image]http://www.bized.ac.uk/virtual/ dc/farming/theory/th4.htm[/image]
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