In economics, what do we usually mean by 'efficiency'?

In economics, 'efficiency' typically refers to making the best use of resources to achieve the desired outcomes. This means utilizing resources such as labor, capital, and materials in a way that maximizes the potential output or benefit derived from them without unnecessary waste.

This concept encompasses both productive efficiency, where goods are produced at the lowest possible cost, and allocative efficiency, where resources are distributed according to consumer preferences. By focusing on optimal resource allocation, we ensure that the inputs are used in such a way that they generate the highest possible value, leading to greater overall economic welfare.

The other options highlight different aspects of economic activity, such as profit maximization or cost minimization, but they do not encapsulate the broad, comprehensive idea of efficiency within an economy. Efficiency is more about the effective use of resources in pursuing various economic goals rather than purely focusing on profit or cost metrics.