A note from Daniel

In economics, "efficiency" refers to how well resources are distributed. Economic theory suggests an economy is fully efficient if there is no way to reallocate resources without any loss of benefit. If we can make one person better off without hurting anyone, then the existing market is not efficient. When a good or service is inefficiently allocated, economists call it a "market failure."

Daniel The Great Mental Models, Volume 4, page 109 · December 21, 2024 Save to shelf
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