ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The term “efficiency” refers to the peak level of performance that uses the least amount of inputs to achieve the highest amount of output. Efficiency requires reducing the number of unnecessary resources used to produce a given output, including personal time and energy.

Detailed explanation-2: -There are several types of efficiency, including allocative and productive efficiency, technical efficiency, ‘X’ efficiency, dynamic efficiency and social efficiency.

Detailed explanation-3: -At the efficient level of output, it is impossible to produce greater consumer surplus without reducing producer surplus, and it is impossible to produce greater producer surplus without reducing consumer surplus. This efficient level is the market equilibrium!

Detailed explanation-4: -Economists usually distinguish between three types of efficiency: allocative efficiency; productive efficiency; and dynamic efficiency.

Detailed explanation-5: -when resources are used to give the maximum possible output at the lowest possible cost. A firm is said to be productively efficient when it is producing at the lowest point on the average cost curve (where Marginal cost meets average cost).