Economic Efficiency means
the optimal use of resources in order to maximize the production of goods and
services. A company or an economic system is more
efficient if it can produce more without
using more resources. In microeconomics production is considered to be
economically efficient when a unit of good is produced at the lowest possible
cost. A situation is economically efficient if no additional unit can be
produced without increasing the amount of inputs.
Additional meaning of Economic efficiency:
The term economic efficiency refers to the use of resources that
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
- No one can be made better off without making someone else worse off.
- No additional output can be obtained without increasing the amount of inputs.
- Production proceeds at the lowest possible per-unit cost.