Final answer:
Effectiveness is about achieving the set objectives, and efficiency is about the optimal use of resources to achieve these objectives. In the context of business and economics, efficiency ensures that production maximizes with minimal resource waste, while effectiveness ensures that desired outcomes are met.
Step-by-step explanation:
Effectiveness, according to Higgins, refers to a description of "whether objectives are accomplished", while efficiency is a description of the relative amount of resources used in obtaining effectiveness. Effectiveness focuses on achieving the end objectives and the degree to which set goals are achieved. In contrast, efficiency is a measure of how well the resources are utilized for achieving those objectives. In business and economics, these concepts are critical in operations and strategic planning, where they translate into producing desired outcomes with as little waste and expenditure of resources as possible.
For example, economic efficiency refers to a situation where an economy maximizes production while using resources to the fullest extent to produce the goods and services in demand by people. It means that all the possible gains from trade have been achieved. Similarly, energy intensity is a measure akin to efficiency, where it indicates how much energy is used relative to the economic output. A lower energy intensity means less energy consumption for a given amount of economic output, reflecting higher efficiency. This concept is also illustrated through the production possibilities frontier, which shows the trade-offs between two different goods or services, highlighting the concepts of productive and allocative efficiency.