Economic efficiency is regarded by many students as a dry topic which is difficult to relate to the real world. But it is worth getting to grips with because once you understand the ideas, you can use them to good advantage when discussing – for example – the effects of government intervention. Are markets working well in allocating resource optimally? Are businesses producing close to the lowest possible unit cost and with minimum waste? In a given industry, is there sufficient dynamic efficiency driven by research and innovation? Does a market take into account external costs and benefits to reach a position of social efficiency? These are the main questions in this section.