• Economic efficiency is when every scarce resource in the economy is used and distributed between producers and consumers in such a way as to provide the greatest economic return and benefit to consumers.

  • Economic efficiency can include efficient production decisions within firms and industries, efficient consumption decisions by individual consumers, and efficient distribution of consumer and industrial goods to individual consumers and firms.
  • Pareto efficiency is when all economic benefits are optimally distributed between production and consumption, so that no changes in the order can be made to improve the situation of someone without worsening the situation of someone else.