Final answer:
Economic efficiency refers to the optimal use of resources to maximize the production of goods and services, often illustrated using a production possibilities frontier (PPF). Technological efficiency involves the use of the best available technology and the ideal combination of resources. Even technologically inefficient firms can profit if they manage to sell their goods at a high enough price.
Step-by-step explanation:
Understanding Economic Efficiency in Business
Economic efficiency is a state where resources are allocated in a way that maximizes the production of goods and services. An economically efficient firm is one that minimizes waste and cost while maximizing production output. This is sometimes represented on a production possibilities frontier (PPF), where all points on the PPF reflect choices that are productively efficient. Conversely, any choice inside the PPF indicates productive inefficiency as it implies that more could be produced with the same resources.
In terms of technology efficiency, this generally means using the most advanced methods and the optimal combination of resources to produce goods or services. When a firm is not using the best available technology or the ideal mix of labor and capital, it might be technologically inefficient. However, even a technologically inefficient firm can be profitable if it can sell its product at a high enough price to cover its costs and earn a surplus.
Lastly, a method that uses a smaller amount of a more expensive resource and a larger amount of a less expensive resource may be considered technologically efficient, but each firm's situation can vary based on the specific cost structure and resource availability.