Critical Reasoning: For large farms to be as productive as they can be, their owners need to invest heavily inexpensive machinery, thistypically requires them to go into considerable debt, and interest on this debt is then a significant fixed cost. This high fixed cost makes those farmers vulnerable to operating losses if the prices of their products drop. The information above best supports which of the following inferences about large farms?

A They can behighly productive without being profitable.

B They tend to be so highly productive that they drive down market prices.

C They tend to beconsistently profitable if their owners borrow at low interestrates.

D They respond to operating losses by increasing their productivity.

Solution

Correct Answer: Option A

Solution

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