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Efficiency
Economic efficiency requires optimality in the following decisions:
  • how to allocate resources; 
  • what to produce;
  • choice of  technology; 
  • how to distribute goods.

 

Optimality means the following: Allocation of labor and capital, choice of products and technology, as well as distribution of goods must be done in such a way, that it would be impossible to increase welfare of one person without reducing welfare of some other person
If it is possible to reallocate resources, change technology or modify distribution of goods in such a way that welfare of both persons can be increased or welfare of one can be increased without reducing welfare of the other, than the original state of the economy was not efficient.

This type of efficiency is also called Pareto efficiency or Pareto optimality .

 

 

 

 

 

 

OK Economics was designed and it is maintained by Oldrich Kyn.
To send me a message, please use one of the following addresses:

okyn@bu.edu --- okyn@verizon.net

This website contains the following sections:

General  Economics:

http://econc10.bu.edu/GENEC/Default.htm

Economic Systems:  

http://econc10.bu.edu/economic_systems/economics_system_frame.htm

Money and Banking:

http://econc10.bu.edu/Ec341_money/ec341_frame.htm

Past students:

http://econc10.bu.edu/okyn/OKpers/okyn_pub_frame.htm

Czech Republic

http://econc10.bu.edu/Czech_rep/czech_rep.htm

Kyn’s Publications

http://econc10.bu.edu/okyn/OKpers/okyn_pub_frame.htm

 American education

http://econc10.bu.edu/DECAMEDU/Decline/decline.htm

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