X-inefficiency refers to the situation in which A. firms that use labor-intensive production...
Question:
X-inefficiency refers to the situation in which
A. firms that use labor-intensive production methods tend to be less efficient than firms that use capital-intensive production methods.
B. firms with market power have less incentive to minimize their costs of production than more competitive firms.
C. highly competitive firms have less incentive to minimize their costs of production than other firms because the highly competitive firms have almost no chance to earn above-average profits.
D. firms are unable to minimize their costs of production because there is no potential for input substitution.
Market Power:
The term market power is an economic term that helps determine the power of each firm in estimating and regulating the market price and quantity of a product in the market.
Answer and Explanation: 1
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View this answer- The correct option is B. Firms with market power have less incentive to minimize their costs of production than more competitive firms.
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