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Economic efficiency is a general term in economics describing how well a system is performing, in generating the maximum desired output for given inputs with available technology. Efficiency is improved if more output is generated without changing inputs, or in other words, the amount of "friction" or "waste" is reduced. Economic efficiency is used to refer to a number of related concepts. A system can be called economically efficient if These definitions of efficiency are not exactly equivalent. However, they are all encompassed by the idea that nothing more can be achieved given the resources available. An economic system is more efficient if it can provide more goods and services for society without using more resources. Market economies are generally believed to be more efficient than other known alternatives. The first fundamental welfare theorem provides some basis for this belief, as it states that any perfectly competitive market equilibrium is efficient (but only if no market imperfections exist).
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