Johnny Ch Lok

Interesting Economic Questions And Explanations Johnny Ch Lok

What does economic efficiency mean?Economic efficiency consists of these three components. Allocative efficiency is measured using superiority or optimality. Optimal is that allocation where no person could be made better off without inflicting harm on another. Superior is that allocation where the benefit received by one person is more than the harm inflicted no another. Cost and benefit approach, technical efficiency is for a given level of output, minimizing costs of alternatively for a given level of costs maximizing output. Full employment efficiency is for a system to be economically efficient, then full employment is also required. When, it has relationship between allocation resources and economic efficiency. In simplicity, allocation of resource imply that decisions must be made by choice. Every choice is costly, there is always the cost alternative to bring opportunity cost, it means the next best alternative that must be foregone as a result of an particular decision. Hence, product manufacturer needs to consider how to raise economic efficiency in order to achieve spending the least resource expenditure to earn the maximize output. For example, when one good manufacturer needs to decide to manufacture either beer or pizza, he /she must need to assume how much is current limited resources ( production possibilities) to achieve the efficient manufacturing output, either beer or pizza . The production beer of pizza choice will follow these requirements to make decision: efficiency, fixed resources, fixed technology, beer and pizza both food manufacturing choice. So, opportunity cost will cause, either manufacturing more pizza and giving up large amount of beer manufacturing or either manufacturing more beer, and giving up large amount of pizza. Because food manufacturing resource and manufacturing technology and time efficiency and labor number factors and limited for this food manufacturing. So, he/she must need to make economic efficient decision to choose either pizza and beer is the most benefit maximization manufacturing food output decision finally. It is one ease for economic efficient food manufacturing example.