Final answer:
Using high-cost materials like 24 karat gold and titanium in solar cells when cheaper alternatives exist without increasing efficiency is an example of X-Inefficiency, which involves higher than necessary production costs without added benefits.
Step-by-step explanation:
If Pacific Gas and Electric Company (PG&E) decided to use 'high-cost' solar cells that included expensive 24 karat gold and titanium linings instead of the common metals of aluminum and copper, which are much cheaper, this could be considered an example of X-Inefficiency. X-Inefficiency occurs when a firm operates at higher costs than are necessary for producing a given level of output.
Since gold and titanium would dramatically increase the costs of producing solar cells without a proportionate increase in the efficiency of those cells, it's not an economically efficient decision unless these materials add other benefits that justify their use.
The primary goal in the production of solar energy is to create a cost-effective and efficient means of generating electricity. Utilizing unnecessarily expensive materials when cheaper alternatives exist that fulfill the same function is an example of X-Inefficiency because it leads to higher production costs and potentially higher prices for consumers without a corresponding increase in value. This concept is particularly relevant given the fact that the price of solar energy falls dramatically, and affordability is key to its widespread adoption.