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What does it mean to use resources efficiently?

Efficiency asks whether a result could be achieved with fewer scarce resources.

If two processes make the same safe product, one using less energy and material is more efficient in those respects. Economists also ask whether resources could be rearranged to make some people better off without making anyone worse off. The question depends on which costs and benefits are counted.

A process that looks cheap to its operator may impose costs on neighbours through pollution or delay. Good comparisons state the goal and include relevant consequences before calling an outcome efficient. An efficient result is not automatically fair.

A small example

Two delivery routes serve the same households. One uses less fuel, but takes much longer for residents waiting for essential supplies.

Keep in mind

Efficiency is a criterion for comparison, not the only goal of a policy.

Source & attribution

Principles of Economics 3e — The Production Possibilities Frontier and Social Choices

OpenStax contributors · OpenStax, Rice University

CC BY 4.0. Rewritten as a self-contained explanation; the example and activity are Vakataka additions. No source images reproduced.

Source edition: 2024-07-18T12:52:27Z

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