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:
“Politics at all times lead to bloody wars, and not only politics, but also religions as well as social and economic systems of all times are spattered with blood. Invariably the big ones devoured the little ones, and the little ones the tiny ones.”
—Friedrich Dürrenmatt (1921–1990)
“I’ll take fifty percent efficiency to get one hundred percent loyalty.”
—Samuel Goldwyn (1882–1974)