Productive Efficiency

(noun)

An economic status that occurs when when the highest possible output of one good is produced, given the production level of the other good(s).

Examples of Productive Efficiency in the following topics:

  • Productive Efficiency

    • Productive efficiency occurs when production of a good is achieved at the lowest resource cost possible, given the level of production of other goods.
    • Production efficiency occurs when production of one good is achieved at the lowest resource (input) cost possible, given the level of production of the other good(s).
    • By improving these processes, an economy or business can extend its production possibility frontier outward, so that efficient production yields more output.
    • This chart shows production possibilities for production of guns and butter.
    • Point X is only possible if the means of production improve.
  • Incentives for Efficiency and Productivity

    • Efficiency is the extent to which effort is used for a task and productivity is the measure of the efficiency of production.
    • Productivity is a measure of the efficiency of production.
    • Productivity is a ratio of production output to what is required to produce it.
    • A production model is a numerical expression of the production process that is based on production data.
    • Summarize the Efficiency Movement and the institutions it, in part, bequeathed
  • Externality Impacts on Efficiency

    • Economic efficiency is the use resources to maximize the production of goods; externalities are imperfections that limit efficiency.
    • In economics, the term "economic efficiency" is defined as the use of resources in order to maximize the production of goods and services.
    • Externalities directly impact efficiency because the production of goods is not efficient when costs are incurred due to damages.
    • Efficiency also decreases when potential money earned is lost on non-paying third parties.
  • Efficiency of Monopolistic Competition

    • Both types of firms' profit maximizing production levels occur when their marginal revenues equals their marginal costs.
    • Productive efficiency occurs when a market is using all of its resources efficiently.
    • This occurs when a product's price is set at its marginal cost, which also equals the product's average total cost.
    • In a monopolistic competitive market, firms always set the price greater than their marginal costs, which means the market can never be productively efficient.
    • This occurs when a product's price equals its marginal benefits, which is also equal to the product's marginal costs.
  • Allocative Efficiency

    • Free markets iterate towards higher levels of allocative efficiency, aligning the marginal cost of production with the marginal benefit for consumers.
    • The amount of value generated in a market that efficient equals the social value of the produced output minus the value of resources used in production.
  • Efficiency Metrics

    • Efficiency ratios for inventory measure how effectively a business uses its inventory resources.
    • Efficiency ratios for inventory are used to measure how effectively a business uses its inventory resources in comparison to its industry or competitors.
    • A low turnover rate may point to overstocking, obsolescence, or deficiencies in the product line or marketing effort.
  • Efficiency Wage Theory

    • Efficiency wage theory is the idea that firms may permanently hold to a real wage greater than the equilibrium wage.
    • However, firms may choose to pay wages higher than the market-clearing equilibrium in order to incentivize increased worker productivity or to reduce turnover.
  • Market Exchange and Efficiency

    • The benefits and cost associated with the production or consumption of any good falls only on the agents engaged in the contract or transaction.
    • Voluntary markets of goods with nonattenuated property rights are consistent with the Utilitarian Ethic and Pareto Efficiency.
  • Reducing Waste and Environmental Impacts

    • Wal-Mart asked suppliers to be more efficient in their deliveries through it's Supplier Energy Efficiency Project (SEEP).
    • In industrial production, using more efficient manufacturing processes and better materials will generally reduce the production of waste.
    • The application of waste minimization techniques has led to the development of innovative and commercially successful replacement products.
    • However, waste reduction in one part of the production process may create waste production in another part.
    • In fact, under Wal-Mart's Supplier Energy Efficiency Project (SEEP), which is aimed at eliminating emissions from the company's supply chain, suppliers reduced GHG emissions by 3,300 metric tons and saved $200,000 in energy costs.
  • Lab 3: Regression (Fuel Efficiency)

    • "fuel efficiency".
    • Explain how you can tell and what this means in terms of weight and fuel efficiency.
    • For a car that weighs 4000 pounds, predict its fuel efficiency.
    • Can we predict the fuel efficiency of a car that weighs 10000 pounds using the least squares line?
    • 6.2 What does the correlation imply about the relationship between fuel efficiency and weight of a car?
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