According to the Department of Agricultural Economics at Michigan State University, efficient resource allocation means that there is efficiency in production, consumption and system. Production efficiency involves producing the best value of goods and services with given resources.
There is consumption efficiency when production, consumption and distribution conform to the values of people based on their willingness to pay, MSU elaborates. System efficiency refers to the exhaustion of all mutual advantageous gains from trade. Additionally, efficiency is attained when three marginal conditions are met. These include the marginal condition for exchange, the marginal condition for factor substitution and the marginal condition for product substitution. MSU states that efficiency is also achieved with non-attenuation of property rights. This means that property rights are enforceable and enforced, exclusive, transferable and completely specified. Moreover, a perfectly competitive market immediately leads to an efficient distribution of goods among consumers and efficient allocation of resources among producers.
According to BusinessDictionary.com, resource allocation is a central theme in economics, and it is related to economic efficiency and maximization of utility. It involves analyzing the distribution of scarce resources among producers and the allocation of scarce goods and services among consumers. It takes into account costs of resources, goods and services, such as opportunity cost, economic cost and accounting cost.