An example of x-inefficiency is
A) an executive cutting the wages of workers during an economic downtown.
B) an executive paying a manager a bonus for increasing profits by 20%.
C) money wasted on TV advertising seen by very few viewers.
D) an executive, at the corporation's expense, hiring a limousine to drive him one block whenever it is raining.

Question

Quizplus · Accepted Answer

X-inefficiency occurs when a firm uses more resources than necessary to produce a given level of output. Hiring a limousine for a short distance at the corporation's expense is an example of wasteful spending, illustrating x-inefficiency.

An Example of X-Inefficiency Is