Technical Efficiency vs Economic Efficiency

Technical efficiency and economic efficiency are two types of concepts that differ from one another in many ways. Efficiency is an important aspect in economic terms.

Technical efficiency happens when there is no possibility to increase the output without increasing the input. Economic efficiency happens when the production cost of an output is as low as possible.

Economic efficiency mainly depends on the prices related to the factors of production. Technical efficiency is considered an engineering matter. It is also said that some things that are technically efficient may not be economically efficient.

When looking at technical efficiency, it means that the natural resources are changed into services and goods without much waste. Here the resources are well utilized for making the goods. In technical efficiency, the workers are not seen to be idle and are always active. Here, the maximum output is gotten from the input of resources. This all means that the production or the end result is gotten at the lowest available cost.

Technical efficiency is really a prerequisite for economic efficiency. This means that in order to achieve economic efficiency, one should have achieved technical efficiency. Only if technical efficiency is achieved can one get better economic efficiency.

An economic efficiency is a state in which every resource is made use of to serve each person in the very best way while minimizing inefficiency and waste. Once there is economic efficiency, any change that is made to assist any person is likely to harm others. Just like technical efficiency, economic efficiency also means better services and goods with minimum waste.

Summary:

1.Technical efficiency happens when there is no possibility to increase the output without increasing the input.
2.Economic efficiency happens when the production cost of an output is as low as possible.
3.Technical efficiency is really a prerequisite for economic efficiency. In order to achieve economic efficiency, one should have achieved technical efficiency.
4.An economic efficiency is a state in which every resource is made use of to serve each person in the very best way while minimizing inefficiency and waste.
5.Once there is economic efficiency, any change that is made to assist any person is likely to harm others.
6.Economic efficiency mainly depends on the prices related to the factors of production. Technical efficiency is considered an engineering matter.

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