The objective of efficient resource allocation refers to an economy's ability to meet its obligations in ensuring that all social and economic objectives are met without waste, for example to allocate resources so that they are distributed efficiently to improve the standard or living.
This is the only way that we can ensure that we will be able to maximize the number of goods and services that we are able to provide. In addition, we will also be more likely to guarantee the long term availability of the resources that are currently available to us.
The current target for efficiency target concerning labor is 1.5-2% per year or more.
Thus, the economic objective of efficiency in resource allocation exists when our productive inputs are used to create the highest possible value of national output (ie GDP is at its highest level). In turn, having more G&S available helps to ensure the maximum satisfaction of our society's needs and wants.
In Economics, we distinguish between four different types of efficiency:1.Productive (or Technical) efficiency: Is about firms producing G&S using the least-cost method and by minimizing the quantity of resources used. This is perhaps the easiest type of efficiency to understand. In this instance, we are interested in ensuring that any time we produce a good or service we are able to do so by using the smallest number of resources. If I use a tree to make four cricket bats, and you can produce five cricket bats from a tree of the same size, then your productive efficiency is better than mine. Another example is also sometimes a higher level of investment spending by firms on new equipment rather than simply employing more staff is the cheapest way to lift output per worker.
2. Allocative efficiency: ensures that resources are...