Answer to Question #129005 in Economics of Enterprise for Tshidi

Question

Are X‐efficiency and allocative efficiency one in the same thing? Discuss with the aid of a graph.
(10)
Q.3.2
Discuss the causes of an increase in government expenditure using Brown and Jackson’s microeconomic model.
(10)
Q.3.3
Analyse the use of subsidies in South Africa as a means of redistributing income, focusing on the costs and benefits of the program.

Answer 1

X-efficiency is the degree of efficiency maintained by firms under conditions of imperfect competition.

Allocative efficiency is when a company's marginal costs are equal to price and can occur when the competition is very high in that industry.

Q.3.2

The factors that may influence the demand and supply of public goods and hence the levels of government expenditure are: changes in the sizes of the population and its structure, and the quality of goods demanded by the median voter.

Q.3.3

The value for Subsidies and other transfers (current LCU) in South Africa was 979,573,000,000 as of 2017.