Economic efficiency

What is economic efficiency?

Economic efficiency refers to the skill with which an economic system uses its resources, efficiently, to achieve maximum production of goods and services.

One system will be more efficient than another if, using the same resources, it is capable of providing more goods and services.

Characteristics of an efficient economy.

Advantages of economic efficiency

The main advantages of economic efficiency are the following:

• Important production improvements.
• Higher production at lower consumption.
• Progress of the technical efficiency.
• Replacement of old processes by new methods that generate greater production.
• Increased profitability and profits obtained, since using fewer resources reduces costs.

Types of economic efficiency

Economic efficiency can be classified into andproductive, scale, social and technical efficiency.

Productive efficiency

It is obtained when, through the good use of efficient economics, a product uses the least amount of resources to produce a quality service.

Scale efficiency

Is about produce the exact without exceeding production.

Although when a greater quantity of a certain product is produced, the cost per unit falls, exceeding it on a large scale can generate some disorder and economic inefficiency.

Social efficiency

It happens when the benefits of producing a certain good outweigh the negative effects that has its production within society.

Technical efficiency

Consists in make good use of raw materials and labor, dedicated to the production of a good, to achieve the lowest possible cost of production.