Final answer:
Pareto inefficiency refers to a suboptimal allocation of resources where improvements can be made, while managerial efficiency is focused on producing the maximum output with minimum waste within a firm. The former is about resource allocation in the economy at large, while the latter pertains to productivity within a specific firm.
Step-by-step explanation:
To distinguish between Pareto inefficiency and managerial (production) efficiency, it's important to understand each concept in the context of economic efficiency as shown by the production possibilities frontier (PPF). Pareto inefficiency, or Pareto suboptimality, occurs when a reallocation of resources can make at least one individual better off without making anyone else worse off. On a PPF that plots healthcare against education, it implies that we could improve the allocation of resources between these two goods such that one can be increased without reducing the other.
Managerial efficiency, on the other hand, pertains to the internal operation of a firm and is often equated with productive efficiency. It refers to the firm's ability to produce the maximum possible output from a given set of inputs or produce a given output using the least input possible. Managerial efficiency is achieved by minimizing waste within the production process, thus operating on the PPF.
Analyze other market structures through the lens of these efficiencies to label them as 'imperfect' because they do not meet the conditions necessary to achieve both productive and allocative efficiency as a perfectly competitive market would.