9/21/2023 0 Comments Will ATC curve shift when perfectly competitive indstury adjusts to new long run equilibirumX-inefficiency also may arise when firm’s workers are poor motivated or under-supervised, also it happens when a firm is inert when it comes to making decisions about future business actions. Why does X-inefficiency occurs if it reduces firm’s revenue? The answer is that some entrepreneurs may have such goals as easier work time, corporate growth, avoidance of business risks or giving some jobs to their relatives that aren’t competent in performing them, so these causes may be in conflict with cost minimization. X-Innefficiency is the failure of firm to produce any specific output at lowest possible average total cost. In other words, the firm owns the technology that permits to achieve the lowest average-total-cost at whatever the quantity output is. ![]() ![]() While we are constructing average-total-cost curve, we assume that firms have the most efficient technology.
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