Final answer:
Efficient in management can be true even when not using resources most cost-effectively, since it encompasses achieving the best outcomes strategically, which may involve considerations beyond immediate cost savings.
Step-by-step explanation:
The statement suggests that efficiency in management doesn't always equate to using resources most cost-effectively. This is true, as efficiency in management not only considers cost-efficiency but also involves making decisions that achieve the best possible outcome with the resources available. This includes considering long-term impacts and broader strategic goals, beyond immediate cost savings. For example, investing in higher-quality equipment may not be the cheapest option but could improve productivity and reduce long-term costs, representing a more efficient use of resources in a strategic sense.
Two types of inefficiency are identified: productive inefficiency and allocative inefficiency. Productive inefficiency is when resources are not used to their full potential, leading to a lower output than possible. Allocative inefficiency occurs when resources are not distributed in a way that aligns with the consumers' preferences, leading to a misallocation that could prevent the maximization of societal welfare. Both types represent a waste of resources, as they do not achieve the optimal output or distribution of goods and services.