Economies of scale.

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Chapter 9, Problem 2.5P

To determine

Economies of scale.

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Lafourche Parish, Louisiana, is the home to three crawfish farms. Thibodeaux Crawfish Farm harvests 40,000 pounds of crawfish per month at a total cost of $50,000. The Mardi Gras Mud Bug Cooperative harvests 25,000 pounds of crawfish per month at a total cost of $35,000. Lafourche Farms harvests 90,000 pounds of crawfish per month at a total cost of $140,000. These data suggest that there are significant economies of scale in crawfish production. Do you agree or disagree with this statement? Explain your answer.

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