Slavery, Inequality, and Increasing Returns to Scale-Micro-Thoughts 3

Name
La Parra Perez
Econ 4010
Date
Slavery, Inequality, and Increasing Returns to Scale-Micro-Thoughts 3
The economies of scale mean that both agricultural products and goods can be produced at low cost when they are produced in large quantities because there is increased efficiency and productivity. The farmers could realize the economies of scale when there were large farm holdings, and many workers to produce cotton. In the economies of scale the long-run the average total cost decreases, as the quantity of output increases. Engerman and Sokoloff highlighted that the large slave plantations produced more agricultural production per capita than the small free farms in the south and as resources shifted into agriculture the large firms became more efficient. The relative efficiency may be linked to the intensive use of labor and other inputs, which is a source of production.
As production increases and the costs of cotton production this is a situation of ordinary economies of scale for the cotton planters. It would be beneficial to increase size of the on plantations especially for those with large farms, and especially, when there is abundance of cheap labor. Small-scale plantation was less efficient and productive, affected the ability of these planters to compete with their large-scale counterparts. Increasing scale of cotton plantations would allow the planters to reach levels of production that exploits the economies of scale of the agricultural activity. However, the economies of scale is limited by the extent of the market (Nicholson and Snyder 229). If the economies of scale were relatively easy to achieve, there would be greater competition in the agricultural sector and the large sc...