X inefficiency occurs when ?
Correct answer: C. Costs are higher than they could be due to a lack of competitive pressure
- A. The price is greater than the marginal cost
- B. The price is greater than the average cost
- C. Costs are higher than they could be due to a lack of competitive pressure
- D. There are external cost
Explanation
X-inefficiency means a firm fails to minimise its production costs, often because weak competitive pressure permits waste or managerial slack. It is different from allocative inefficiency, where price exceeds marginal cost.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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