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Agriculture has greatly contributed to and interacted with economic growth in the United States. Particular characteristics of this growth are development of advanced management systems, rapidly advancing technology which places a premium on change and furthers the mechanization process, and changes in the relative real prices of labor and capital. Collectively, these forces have led to development of larger and more highly capitalized farming systems. Both machine technology and the decline in the real cost of capital relative to labor encourage the substitution of capital technology for farm manpower. Under intensive capital technology, fixed costs ordinarily are larger and per unit costs of production are lower for larger farms than for smaller ones. Lower per unit costs result from expansion of farm size and greater specialization so that machine capacity can be more fully utilized.

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Center for Agricultural and Rural Development, Iowa State University


Ames, IA


Agricultural and Resource Economics | Agricultural Economics | Agriculture | Rural Sociology

Farm size and cost function in relation to machinery technology in north central Iowa