Economic Efficiency

Economic Efficiency

Economic Efficiency, relates to output per unit cost of the resources employed; contrasted with technical eciency, which measures output of energy per unit of energy applied. The difference is that economic efficiency is concerned with cost and value. A machine may produce a product that satisfies technical, chemical or engineering criteria, but it is economically inefficient if its costs are so high that no one will pay the price sufficient to cover theta. A. technically perfect car would incorporate the ideal materials; but no one would buy it.

Economic Flow. See Flow, Economic.

Economic Friction, the influences that impede the full or rapid operation of economic 'laws'. For example, if labour is completely mobile between jobs and areas, seeks the highest return for its services and knows of changes in pay and conditions offered throughout the economy, men will shift their occupations in such a way that there is a tendency for the net advantages in jobs of a given grade of skill to be equal. in practice, ignorance of opportunities or obstacles to movement, such as an inefficient market in housing or trade union restrictions, produce the friction which restricts and slows down the adjustment to new or changing conditions.

In the physical sciences analysis of a world without frictions is made more realistic by introducing them and observing theireects. In the social sciences this method is impracticable since an economy cannot easily be dissected in order to examine parts of it one at a time. fiJ

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Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this consumeraffairs.org.uk site is therefore not a final statement of economic doctrine.

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