In economics, the term economic efficiency refers to the use of resources so as to maximize the production of goods and services. An economic system is said to be more efficient than another (in relative terms) if it can provide more goods and services for society without using more resources. In absolute terms, a situation can be called economically efficient if:
- No one can be made better off without making someone else worse off (commonly referred to as Pareto efficiency).
- No additional output can be obtained without increasing the amount of inputs.
- Production proceeds at the lowest possible per-unit cost.
These definitions of efficiency are not exactly equivalent, but they are all encompassed by the idea that a system is efficient if nothing more can be achieved given the resources available.
Read more about Economic Efficiency: Theory, Criteria, Competing Goals
Famous quotes containing the words economic and/or efficiency:
“We have heard all of our lives how, after the Civil War was over, the South went back to straighten itself out and make a living again. It was for many years a voiceless part of the government. The balance of power moved away from it—to the north and the east. The problems of the north and the east became the big problem of the country and nobody paid much attention to the economic unbalance the South had left as its only choice.”
—Lyndon Baines Johnson (1908–1973)
““Never hug and kiss your children! Mother love may make your children’s infancy unhappy and prevent them from pursuing a career or getting married!” That’s total hogwash, of course. But it shows on extreme example of what state-of-the-art “scientific” parenting was supposed to be in early twentieth-century America. After all, that was the heyday of efficiency experts, time-and-motion studies, and the like.”
—Lawrence Kutner (20th century)