Figure 5. Torque converter.

If a person has the choice of installing oil, gas, or electric systems to heat a house and believes that any one of the three would perform equally well, the system that is cheapest is the efficient choice. If, however, the individual compares heating with an oil furnace to heating with a wood-burning stove, monetary cost may not be the only consideration.

Wood may be cheaper and oil more convenient. If two people are confronted by the same information and one chooses wood while the other chooses oil, both decisions may be economically efficient in the sense of maximizing the utility, or satisfaction, of the decisionmaker.

People differ in their preferences and in the value they put on their time. For consumer choices in particular, the entire list of qualities of services provided by different energy sources can be...