Question

Efficiency:

Paul Heyne's definition:

Efficiency = value of output / value of input

Note that this definition is subjective, incorporating value judgements.

Mateer's definition:

Efficiency: the property of a resource allocation of maximizing the total surplus received by all members of society.

Maximize: Total Surplus = Value to Buyers less Cost to sellers

Other concepts:

Allocative Efficiency - Producing the combination of goods and services that satisfies society's wants to the greatest degree.

Technical Efficiency - Producing goods and services for the least possible cost while maintaining full utilization of resources.

Assignment: Just let me know that you understand the basic ideas.

Answer 1

*Answer:

EFFICIENCY

Efficiency refers to that, if all the goods and factors in the production are able to distributed in the fully satisfied manner and the waste is eliminated or it is reduced to the minimized manner. It involves the precise decision taken by the firm within the production of that goods or resources and also the proper utilization of the product in it's apt way by the consumer.

The principles of the economic efficiency came to manner because the resources are scarce in the nature. So the judicious use of these resources in an apt way is very much important. The inability and impotency over the use of these resources in very much strategic in economy.

TOTAL SURPLUS

The aim of a good and consistent economy is the welfare of the society. The consumers have the tendency to buy the goods at a low amount and the sellers has to sell their goods at high price. There exist consumer surplus and producer surplus. Consumer surplus means the difference between the willingness to buy and the actual price and the producer surplus means the difference in the price he want to sell and the cost of production.

Here the total surplus mens the difference between the value of buyers to buy the product and the cost which accounts for the total cost for production along with his time and way to sell the product.

ALLOCATIVE EFFICIENCY

The allocative efficiency refers to that the production in the economy which depends on the consumer's preference. In the stages of production or the processing of goods, even each and every point to the end must be beneficial to consumers at any point. And even the last point of production must account some cost effective measure to the consumers.

TECHNICAL EFFICIENCY

Technical efficiency, is the term related to that the provided set of inputs Applied at a time is used to produce the maximum output. It refers to the effectiveness of input methods or to produce the goods in most fair manner and to avoid the unwanted waste.

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