EFFICIENCY

Economic entities (private households, enterprises and the state with its subdivisions such as public administration, state enterprises, municipal enterprises) are required to deal rationally with scarce resources (rational principle). Economic efficiency is therefore not only the selection principle of business administration,[1] but also of public business administration.[2] In order to fulfil economic efficiency, either a given yield can be achieved with as little effort as possible (minimum principle) or a maximum yield can be achieved with as much effort as possible (maximum principle). In both cases, expenditure and yield are compared, whereby profitability exists if the yield is greater than the expenditure used for this.

Accordingly, it is uneconomical if the expenditure exceeds the yield achieved. Also with the cost-benefit analysis and the cost-effectiveness analysis questions of economy are in the foreground.

Thus, the economic efficiency principle is a specific expression of the rationalization principle.

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