Final answer:
Inefficiency in resource allocation, referred to as allocative inefficiency, occurs when resources are not used in alignment with societal preferences, resulting in a wasteful mix of goods that does not maximize societal welfare.
Step-by-step explanation:
An allocation of resources being described as inefficient because a good is not being produced by the sellers with the lowest cost is an example of inefficiency in the context of economic terminology. This situation is specifically related to allocative inefficiency, which occurs when the mix of goods being produced does not match the preferences or needs of society. While productive efficiency is about producing goods without being able to increase the production of one good without decreasing the quantity of another, allocative efficiency ensures that the specific mix of goods produced represents what society most desires. Therefore, allocative inefficiency is also wasteful because it means resources are being used in a way that does not maximize societal welfare, potentially leading to overproduction of less desired goods and underproduction of those more in demand.