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Efficient Frontier

Efficient frontier is an economics term commonly used in performance measurement, although it has more recently also been applied to decision analysis. Another term for it is production possibilities curve. It shows the maximum output attainable from various combinations of inputs: the boundary between what is possible with the given resources and technologies and what is not.

Performance of Firms

Economists speak of firms or decision-making units, which convert a variety of inputs (materials, capital, and labor) into outputs. These outputs can be goods and/or services, and the firms may be public, for-profit, or not-for-profit. A variety of methods have been used to measure the performance of firms. One common measurement is the productivity ratio, which is related to concepts of efficiency.

Defining Productivity and Efficiency

Productivity is ...

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