economic inefficiency

Economic inefficiency occurs when resources—such as labor, capital, or raw materials—are not used in the most effective way to maximize overall well-being or output. This means that goods and services could be produced more or distributed more fairly without sacrificing quality, but current arrangements prevent this ideal. Inefficiency can lead to wasted resources, higher costs, or unmet needs in society. It typically indicates that the economy is not operating at its full potential, resulting in less value being created than possible. Addressing inefficiencies helps improve the overall prosperity and well-being of society.