1. What is X inefficiency?
- X inefficiency occurs when there is little incentive for firms to want to be efficient.
- X inefficiency occurs when a firm uses more inputs than are necessary for a given level of output. Associated with lack of competition e.g. within a monopoly
- X inefficiency occurs when a market fails to deliver the amount of products and services most wanted by consumers
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2. What is economic efficiency?
- Economic efficiency occurs in a market when both allocative and productive efficiency are achieved.
- Economic efficiency occurs when a firm uses the right amount of inputs that are necessary for a given level of output.
- Economic efficiency occurs when scarce resources are used in a way that maximises consumer satisfaction.
3. Which of these is NOT an example of X inefficiency?
- Adopt inefficient managerial practices
- Technical economies of scale
- Employ surplus labour
4. What is static efficiency?
- Static efficiency occurs in a single time period e.g. efficiency now
- Static efficiency occurs over time
5. Where does productive efficiency occur?
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