Question

A company’s target production is 5000 units in a year. Ram, the manager of the company, is able to produce 5000 units, but at a higher production cost. Then Ram is .
(A) Effective as he was able to attain the targeted production at minimum cost
(B) Efficient as he was able to attain the targeted production at a higher cost
(C) Effective as well as efficient
(D) Effective but not efficient because of high production cost
(E) Efficient but not effective
Choose the correct answer from the options given below:

• A. (D) only
• B. (A), (C), and (E) only
• C. (A), (B), (C), and (D) only
• D. (C) and (E) only

Answer 1

The Correct Option is A

In business studies, the terms effective and efficient have distinct meanings: 

• Effectiveness refers to achieving a set goal or target regardless of the resources used.
• Efficiency involves achieving the same goal but utilizing fewer resources or at a lower cost.

In the given question, Ram manages to produce the targeted 5000 units but incurs a higher production cost. This means he achieved the target, making him effective, but did so with higher costs, indicating a lack of efficiency.

Therefore, Ram is effective but not efficient because of the high production cost. Thus, the correct choice is: D Only.

Answer 2

Ram is considered "effective but not efficient" because he was able to meet the target (effectiveness) but did so at a higher cost, which means he was not efficient. Efficiency refers to minimizing the cost and maximizing output with the least possible input, and in this case, Ram failed to do that. While he achieved the goal, the process was not optimized for cost-effectiveness.