(TCO C) Revenue increases or cost reductions resulting from mergers that are not due to scale or scope economies are called . Group of answer choices cost economies of scope revenue economies of scope cost economies of scale revenue economies of scale X efficiencies

X-efficiency

Explanation:

X-efficiency describes a company’s inability to obtain a maximum output for its input due to a lack of competitive pressure. This is common in imperfect markets such as monopolies and oligopolies. In perfectly competitive markets, firms must maximize their efficiency in order to succeed, make a profit and survive in the market. This is due to the pressure of having a large number of competitors. They are allocatively efficient, where the marginal cost is equal to the price.

However, under imperfect competition, the company faces little competition. Hence, they are not motivated to maximize profits since they are already profitable due to little pressure from competitors. This is heightened when they merge and are simply able to increase revenue by being price setters in the market and reduce costs because of high bargaining power. Thus they do not have to allocate resources efficiently to make profits.

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