Efficient use of resources

Indian Economy glossary

Also called: efficiency · Topic: Scarcity, Choice and Economic Systems · NCERT: Class 9, Ch 8 "Building Blocks in Economics: The Problem of Choice"

Meaning

Efficient use of resources means getting the maximum possible output from the resources available, with no waste. On a production possibility curve (PPC), which shows the maximum combinations of two goods an economy can make, efficiency is shown by any point on the curve. Being inside the curve means some resources are idle or wasted. Once an economy is on the curve, it can make more of one good only by making less of the other.

Example

Suppose a region can produce 50 kg of barley and 70 kg of wheat with its land and labour, but produces only 50 kg of barley and 50 kg of wheat. Then it is using its resources inefficiently, because some workers or land are idle. Putting them to work moves it onto the curve.

Don't confuse with

  • Outward shift of the PPC: moving from inside the curve to on it (for example by reducing unemployment) is not a shift. The curve shifts out only with more resources or better technology.

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