Efficiency in production means?

1. Analyze the question The question asks for the meaning of efficiency in production, a basic concept in the theory of production.

2. Explain the concept Efficiency in production means making the best use of scarce resources. A firm is efficient when it produces a given level of output at the minimum possible cost. Put another way, it gets the maximum output from a given set of inputs. This is why economists talk about the "least-cost combination of factors of production" (land, labour, capital and entrepreneurship).

3. Evaluate each option

• A. Reducing the size of the work force: Wrong. Cutting workers may lower costs in some cases, but it can also reduce output. Efficiency is about the cost-output relationship, not about headcount.
• B. Producing a given output with the lowest cost combination of factors of production: Correct. This is the standard definition of productive efficiency.
• C. Adoption of capital intensive technology: Wrong. Capital-intensive methods are not always the cheapest. In Nigeria, where labour is abundant, labour-intensive methods can sometimes be more efficient.
• D. Increasing the quantity of the fixed factors of production: Wrong. This raises capacity or scale, not efficiency. It could even raise costs.

4. Answer The correct answer is B.

5. Exam tip Link efficiency with "least cost" or "maximum output from given inputs". If you see these phrases in an option, it is very likely the right one. Be wary of options that name one specific method (cutting workers, using machines), because efficiency is about the result, not one particular method.