Refer to the quantities of inputs vs the quantity of output.
A firm is said to be technologically efficient if it produces the output with the least amount of inputs.
Economic efficiency
Refer to dollar value of inputs vs the dollar value of output
A firm is said to be economically efficient if it produces the output with the lowest cost of inputs.
Notes:
- If a firm is not technologically efficient, it cannot be economically efficient. But if it is technologically efficient, it may be not economically efficeint.
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