There is some evidence to suggest that X-inefficiency is
A) absent whenever two or more producers are competing with one another.
B) not encountered in either competitive or monopolistic firms.
C) more likely to occur in monopolistic firms than in competitive firms.
D) more likely to occur in competitive firms than in monopolistic firms.

Question

Quizplus · Accepted Answer

X-inefficiency is more likely to occur in monopolistic firms than in competitive firms. This is because competitive firms have to be efficient in order to survive and stay in business, whereas a monopolistic firm may have less incentive to be efficient since they do not face as much competition.

There Is Some Evidence to Suggest That X-Inefficiency Is