In which one of the following market models is X-inefficiency least likely to be present?

Question

Quizplus · Accepted Answer

X-inefficiency is least likely to be present in a market with pure competition. In a perfectly competitive market, firms have little market power, and hence they have to be efficient to survive. As a result, firms in a perfectly competitive market are likely to operate at their lowest possible average cost, ensuring that there is no X-inefficiency.

In Which One of the Following Market Models Is X-Inefficiency