Which of the following statements is true?
A)Various studies have shown that economies of scale best explain cost discrepancies between FIs.
B)Various studies have shown that economies of scope best explain cost discrepancies between FIs.
C)Various studies have shown that X-inefficiencies best explain cost discrepancies between FIs.
D)Various studies have shown that Y-inefficiencies best explain cost discrepancies between FIs.

Question

Quizplus · Accepted Answer

Various studies have indicated that X-inefficiencies, which refer to inefficiencies within a firm due to factors such as lack of effort or misallocation of resources, best explain the cost discrepancies between financial institutions (FIs). This concept suggests that differences in management efficiency and operational practices are significant contributors to why some FIs operate at lower costs than others.

Which of the Following Statements Is True