The relationship between inputs used and output achieved. It is all about minimising waste in terms of resources, including time. It involves: keeping down the level of waste in production; keeping down the time it takes to produce a product / provide a service; making full use of resources; securing increased output of each unit of input. It can be measured in terms of unit (or average) costs. This is calculated by dividing the total cost (fixed + variable) involved in producing a product (or providing a service) by the number of units produced (or customers served). If one firm produces goods at a lower cost than a rival firm produces goods of the same type and quality, then we say that the first firm is more efficient. This is expressing it in monetary terms but – as suggested above – it can also be measured in terms of time ie the length of time it takes a business to complete a process, produce a product, or provide a service to customers. The efficiency of a specific input or process can also be measured, eg: Labour: the amount produced per employee; Capital equipment: the amount produced per machine; Production process: the amount of wastage produced. Improvements in efficiency lead to a lower average (unit) cost. Improvements in efficiency in terms of time may also result in products being produced and / or customers being served more quickly than competitors and, thus, also help to achieve objectives relating to sales growth and market share.