efficient

Examples of efficient in the following topics:

• Productive Efficiency

  • Productive efficiency occurs when the economy is getting maximum output from its resources .
  • An equilibrium may be productively efficient without being allocatively efficient.
  • Productive efficiency requires that all firms operate using best-practice technological and managerial processes.
  • So, consumers may pay less with a monopoly, but a monopolistic market would not achieve productive efficiency.
  • Points B, C, and D are productively efficient and point A is not.

• Allocative Efficiency

  • Free markets iterate towards higher levels of allocative efficiency, aligning the marginal cost of production with the marginal benefit for consumers.
  • Optimal efficiency is higher in free markets, though reality always has some limitations and imperfections to detract from completely perfect allocative efficiency.
  • Markets are not efficient if it is subject to:
  • Allocative efficiency is the main means to measure the degree markets and public policy improve or harm society or other specific subgroups.
  • For example, for the U.S. to achieve an allocative efficient market, it would need to produce a lot of coffee.

• Markets are Typically Efficient

  • A perfectly competitive market with full property rights is typically efficient.
  • In absolute terms, a situation can be called economically efficient if:
  • Economists refer to two types of market efficiency.
  • A market can be perfectly efficient but highly unequal, for example.
  • While this is economically efficient, many would argue that it is not desirable.

• Externality Impacts on Efficiency

  • Economic efficiency is the use resources to maximize the production of goods; externalities are imperfections that limit efficiency.
  • An economically efficient society can produce more goods or services than another society without using more resources.
  • Positive and negative externalities both impact economic efficiency.
  • Externalities directly impact efficiency because the production of goods is not efficient when costs are incurred due to damages.
  • When market imperfections exist, the efficiency of the market declines.

• Thinking about Efficiency

  • An efficient market maximizes total consumer and producer surplus.
  • Not all markets are efficient.
  • Economists often seek to maximize efficiency, but it is important to contextualize such aims.
  • Efficiency is but one of many vying goals in an economic system, and different notions of efficiency may be complementary or may be at odds.
  • Most commonly, efficiency is contrasted or paired with morality, particularly liberty, and justice.

• Criteria to Evaluate Ends and Means

  • At another level, the choices of means to achieve a given end may appear to be based on efficiency.
  • Ultimately, efficiency rests on a foundation of ethics.
  • An immoral objective can be achieved "efficiently. " Nazi Germany sought "efficient" means to achieve the annihilation of an ethnic group.
  • Modern, neoclassical economics is often perceived as a study of efficiency with in the context of a very specific ethical system: "utilitarianism

• The Coase Theorem

  • The Coase theorem states that private parties can find efficient solutions to externalities without government intervention.
  • The Coase Theorem, named after Nobel laureate Ronald Coase, states that in the presence of an externality, private parties will arrive at an efficient outcome without government intervention.
  • The farmer has an incentive to bargain with the rancher to find a more efficient solution.
  • In practice, transaction costs are rarely low enough to allow for efficient bargaining and hence the theorem is almost always inapplicable to economic reality.
  • According to the Coase theorem, two private parties will be able to bargain with each other and find an efficient solution to an externality problem.

• Criteria to evaluate alternatives

  • Generally, the criteria will involve two aspects; efficiency and ethics.
  • Technical efficiency can be considered in the production of a single good.
  • In physics efficiency the concept of efficiency can be calculated by the different measures of energy (or the capacity to do work).
  • What is the efficiency of an automobile?
  • The Pareto efficiency criterion fails to justify choices that result in the highest valued use of resources (economic efficiency).

• Government Intervention May Fix Inefficient Markets

  • Governments can intervene to make a market more efficient when a market failure, such as externalities or asymmetric information, exists.
  • A market can be said to be economically efficient if it has certain qualities:
  • Market failure is the name for when a market is not efficient; that is, when it deviates from one or more of the above conditions.
  • However, in reality no market is perfectly efficient.
  • Another case in which markets do not operate efficiently on their own is the market for public goods.

• Efficiency of Monopolistic Competition

  • Monopolistic competitive markets are never efficient in any economic sense of the term.
  • In terms of economic efficiency, firms that are in monopolistically competitive markets behave similarly as monopolistic firms.
  • Productive efficiency occurs when a market is using all of its resources efficiently.
  • Allocative efficiency occurs when a good is produced at a level that maximizes social welfare.
  • Again, since a good's price in a monopolistic competitive market always exceeds its marginal cost, the market can never be allocatively efficient.