Notes On The Meaning Of Efficiency

1009 Words Nov 16th, 2016 5 Pages
Yasir Abidi
Econ 415

Short Paper 3: The Meaning of Efficiency in Organizations
Efficiency is the ability of an entity to use alternative methods of production to get better outcomes. It is applied in production where equal input which relates to cost is lower compared to output in an organization. Allocative efficiency ensures that the correct mixture of input to get maximum output (Palmer & Torgerson, 1999). The study of economics means that there are limited resources to produce for the public and meet the needs of the consumers. Efficiency is intended to minimize the cost of production which trickles down to lower prices and higher demand.
Decision making in an entity is the key driver towards the production methods chosen. Production could be inefficient or efficient and have an influence on the entire organization. Decisions are in unbounded rationality are restricted by the information they possess, their mindset and the time available to implement the decisions. Consequently, the economic decisions made have an impact on the prices, resources allocated and the eventual returns of an organization. The focus in the situation is to seek solutions that are satisfactory which may not be optimal for a company. There is a tendency to ignore information that may be critical to achieving the results that are perceived satisfactory which fundamentally ignores returns maximization (Katsikopoulos, 2014).
Unbounded rationale implies that an individual works for an…
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