Consider the cost curves show to the right for some firm. Suppose the firm is operating on the higher cost curves ATC_TI and MC_TI it is technically inefficient if the lower curves can be reached without a change in production technology or a change in input prices.

If the lower curves, ATC_TE and MC_TE are available without technological change and without a reduction in input prices then if the firm is operating on the higher curves it must be wasting inputs. This is like hiring inputs which contribute nothing to output, (like in-laws :). For a firm to be technically efficient, it must be on the lowest possible cost curves given current technology and input prices.

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