Dikawana Poultry Farm is a chicken farm operating in Goodhope and produces 25 000 chickens per month. The total cost of production for this chicken farm is US$28 000. Not far from Dikawana Poultry Farm are two other farms, Lifalethu Poultry Farm and Makhupu Farm. Lifalethu Poultry Farm produces 55 000 chickens a month at a total cost of US$ 50 050 while Makhupu Farm produces 100 000 chickens a month at a total cost of US$ 91 000. The production data suggest that there are significant economies of scale in chicken production. Do you agree or disagree with this statement? Support your answer using data. [10 marks]

MICROECONOMICS