Question

What is meant by efficient resource allocation?

Answer 1

Efficient resource allocation means using available resources in such a way that maximum possible output is produced without any wastage.

Production is considered efficient if it is not possible to produce more of one good without reducing the output of another good in the economy.

Similarly, distribution is efficient if no one can be made better off without making someone else worse off.

Essentially, it ensures that resources are utilized optimally to provide maximum products and there is no misuse or idling of resources in the economy.