Which of the following best describes/defines X-inefficiencies?
A)The average cost of production decreases as the level of output increases.
B)The effects on costs related to managerial ability and other hard-to-quantify factors.
C)Cost savings are realized from using many of the same inputs to produce multiple products.
D)The average cost of production increases as the level of output increases.
E)Cost increases are realized from using many of the same inputs to produce multiple products.

Question

Quizplus · Accepted Answer

X-inefficiencies refer to the cost increases due to factors that are difficult to measure or control, such as poor managerial ability, lack of motivation, or employee resistance to change. Option A is describing economies of scale, where the cost of production decreases as output increases. Option C is describing economies of scope, where cost savings are realized from producing multiple products with the same inputs. Option D and E are both describing diseconomies of scale, where the average cost of production increases as output increases, but they do not address the specific factors causing the increase.

Which of the Following Best Describes/defines X-Inefficiencies