Economic efficiency measures the relationship between the results of economic activity and the costs and expenses of living and actual employment.

This ratio indicates how competitive the company is based on the price at which the final result was achieved. In addition to determining the level of use of certain types of costs, this indicator also assists in assessing the efficiency of production activities themselves. Furthermore, this ratio can be used to determine the most suitable and economical means of improving technical equipment, production, and management.

When you say how cost effective it is you are getting a good idea of the level of profitability and efficiency. Hence it is an important indicator that should be considered. By dividing the costs by the total income you can get a good idea of cost efficiency as you can see if it is worthwhile or not to undertake, but bear in mind that cost effectiveness is not quite the same as cost efficiency as the latter is more monetary in value than the other.

A cost-effectiveness ratio is a net cost divided by changes in health outcomes. Examples include cost per case of disease prevented or cost per death averted. However, if the net costs are negative (which means a more effective intervention is less costly), the results are reported as net cost savings.

Cost effectiveness is the measurement of what resources are spent for a particular outcome, then adjusting that cost to determine how much was invested for that outcome in order to compare it with the alternatives. This means that cost effectiveness is measuring the resources expended and return on investment-its value for money.