Efficiency
Efficiency
- An economic process is said to be efficient if it minimizes waste. Our definition of waste depends on our norms and objectives.
- E.g. a timber company will want to use least-cost harvest methods to prevent the waste of potential profit.
- Doing so, however, may result in damage to the ecosystem of the affected area.
- Since the objective is to maximize profit, damage to the ecosystem is not counted as waste; waste would be lost profits created by more costly sustainable forestry practices.