Q:

What is an example of economic efficiency?

A:

Quick Answer

An example of economic efficiency is when a piece of land is purchased for the highest possible price while financially benefiting the new landowner. If no other potential buyer is willing to pay a higher amount, maximum economic efficiency is reached with the purchase.

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Full Answer

Economic efficiency measures the relationship between the value of the ends and the value of the means, taking into account the balance between benefit and loss. Essentially, if a system cannot be altered without incurring the financial detriment of a member of the system, the system has reached maximum economic efficiency.

Private ownership is often considered essential to equations of economic efficiency, as it allows the assigning of monetary value to resources. This principle only incorporates monetary value, not other values involved in public policy decisions.

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