Question

Why is efficiency considered to be a reasonable goal for economic performance?

Answer 1

Efficiency is about how much inputs are used for a given amount of output or how much outputs are produced for a given amount of inputs. An economic system is considered to be efficient when it produces maximum output with a given amount of input or uses minimum inputs to produce a given amount of output. Therefore, an economic system is efficient when there is no waste.

Efficiency is considered to be a reasonable goal for economic performance because the central goal of economics is to most efficiently use the limited resources to meet unlimited wants. Since resources are limited, we must strive to put the resources to their best use to maximize utility and minimize waste. Economic efficiency means the best utilization of resources with minimum waste.