ECON 208 Chapter Notes - Chapter 8: Methamphetamine, Opportunity Cost, Watt

• School: McGill University
• Department: Economics (Arts)
• Course: ECON 208
• Professor: Wendy Dickinson

Document Summary

In popular discussion, business decision making, and government policies, three differ- ent types of efficiency concepts are encountered. Each is a valid concept, and each conveys useful information. However, the use of one concept in a situation in which another is appropriate is a fre- quent source of error and confusion. Engineering efficiency engineering efficiency refers to the physical amount of some single key input that is used in production. It is measured by the ratio of that input to output. For example, the engineering efficiency of an engine refers to the ratio of the amount of energy in the fuel burned by the engine to the amount of usable energy produced by the engine. The difference is in friction, heat loss, and other unavoidable sources of waste. Note that engineer- ing efficiency is expressed in terms of the use of a single input and does not involve financial considerations it is purely about physical relationships.