X-inefficiency refers to a situation in which a firm
A) is not as technologically progressive as it might be.
B) encounters diseconomies of scale.
C) fails to realize all existing economies of scale.
D) fails to achieve the minimum average total costs attainable at each level of output.

Question

Quizplus · Accepted Answer

X-inefficiency occurs when a firm is operating at a higher cost level than necessary, meaning it is not achieving the minimum average total costs attainable at each level of output. This can happen due to factors such as inefficient management, lack of motivation among workers, or outdated technology. A, B, and C are not the best choices because they do not directly pertain to the concept of X-inefficiency.

X-Inefficiency Refers to a Situation in Which a Firm