inefficient

(adjective)

Incapable of, or indisposed to, effective action; habitually slack or remiss; effecting little or nothing; as, inefficient workers; an inefficient administrator.

Related Terms

Examples of inefficient in the following topics:

  • Why Governments Intervene In Markets

    • Governments intervene in markets to address inefficiency.
    • In inefficient markets that is not the case; some may have too much of a resource while others do not have enough.
    • Inefficiency can take many different forms.
    • In an unregulated inefficient market, cartels and other types of organizations can wield monopolistic power, raising entry costs and limiting the development of infrastructure.

  • Thinking about Efficiency

    • There are a number of reasons why a market may be inefficient.
    • Perhaps most well known is inefficiency caused by government intervention.
    • Market inefficiency can also be caused by things such as irrational market actors and barriers to transactions, such as an inability for buyers and sellers to find one another.
    • For example, taxation will always cause some inefficiency in markets, but many individuals believe that the benefits of programs such as Social Security and public schooling are worth the loss in efficiency.

  • Defining Monopolistic Competition

    • The demand is inelastic and the market is inefficient.
    • Markets that have monopolistic competition are inefficient for two reasons.
    • The first source of inefficiency is due to the fact that at its optimum output, the firm charges a price that exceeds marginal costs.
    • The second source of inefficiency is the fact that these firms operate with excess capacity.

  • Government Intervention May Fix Inefficient Markets

    • In general, minor inefficiencies do not dramatically effect society.
    • But when society is adversely affected by economic inefficiency, such as when a monopoly firm raises prices to a point where people cannot afford a basic good, the government will sometimes intervene.
    • Externalities are an example of economic inefficiency, since those involved in the economic transaction do not bear the full costs of the transaction.

  • Behavioral Economics: Irrational Actions

    • Errors impact prices and returns which the create market inefficiencies.
    • It also looks at how other participants take advantage of market inefficiencies.
    • Market inefficiencies: include the study non-rational decision making and incorrect pricing.

  • Reasons for Efficiency Loss

    • Monopolies can become inefficient and less innovative over time because they do not have to compete with other producers in a marketplace.
    • Also, long term substitutes in other markets can take control when a monopoly becomes inefficient.

  • Government Failure

    • The market fails and government intervention causes a more inefficient allocation of goods and resources than would occur without the intervention.
    • When analyzing government failure, inefficient regulation contributes to market failure.
    • The are three specific regulatory inefficiencies:

  • Short Run Outcome of Monopolistic Competition

    • Monopolistic competitive markets can lead to significant profits in the short-run, but are inefficient.
    • In the short run, a monopolistically competitive market is inefficient.

  • Long Run Outcome of Monopolistic Competition

    • In the long run, firms in monopolistic competitive markets are highly inefficient and can only break even.
    • In the long-run, a monopolistically competitive market is inefficient.

  • Public Choice: Median Voters and Inefficient Voting Outcomes

    • Since not every voter participates in an election, not every voter will have full information, and not every voter will vote based on what s/he perceives as the best long-term outcome, voting outcomes may be inefficient.