The non-parametric approach developed by Afriat is widely used to determine economic efficiency among producers. This approach regards any difference between the potential optimal profit (or cost) and real profit (or cost) as inefficiency. However, if farms are risk averse and/or have limited amount of expenditure for inputs, they produce less than they would have without those restrictions. If these situations are not properly modeled, their effects are incorrectly estimated as inefficiency. This study examines the effects of failure to consider the expenditure constraint and risk premium on the non-parametric approach in case of Hanwoo cattle producers. The empirical results show that the bias from omission of these constraints are substantial. This study suggests that considering various institutional and financial restrictions existing in the real be essential for correct efficiency measures and policy recommendations.