Efficient resource allocation involves distributing resources in a manner that maximizes output or minimizes waste, ensuring that every resource is used optimally to achieve the best possible outcome. It is crucial in economics, business, and environmental management as it directly impacts productivity, cost-effectiveness, and sustainability.
Optimal output is the level of production where a firm maximizes its profits by equating marginal cost and marginal revenue. It reflects the most efficient allocation of resources where the firm’s cost structure aligns perfectly with market demand.