There Is Some Evidence to Suggest That X-Inefficiency Is

question 17

Multiple Choice

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.

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Definitions:

Substitution Effect

The change in consumption patterns due to a change in relative prices, causing consumers to substitute one good for another more price-friendly option.

Marginal Productivity

The extra output that is produced by using one more unit of a factor, keeping all other factors constant.

Highly Substitutable

Refers to goods or services that are readily replaced with alternatives by consumers due to minimal differences in characteristics or functionality.

Unit Costs of Production

The average cost incurred in producing one unit of a good, calculated by dividing the total cost of production by the number of units produced.