What is Productive efficiency?
In [[economics]], '''productive efficiency''' is a situation in which an [[economy]] is not able to produce any more of one good without reducing the production of another good. As [[Resource (economics)|resources]] are limited, it is not possible for more units of a good to be produced without taking away the resources used for producing another good. The concept of productive efficiency can be shown on a [[production possibility frontier]] (PPF), where all points on the curve are productively efficient.<ref>{{Cite book|first = Barry|last = Standish|title = Economics: Principles and Practice|publisher = Pearson Education|location = South Africa|isbn = 978-1-86891-069-4|pages = 13 - 15}}</ref> Productive efficiency refers to the maximum amount of [[output]] that an economy can produce at a certain point in time. However, if firms in the economy were to improve on their production methods and increase productivity, it is possible for the PPF to shift outwards, thus allowing more goods to be produced than before. Productive inefficiency happens when [[factors of production]] (i.e. land, labor, capital or enterprise) are not used to its maximum. For example, labor in the form of workers may be sitting and not doing any work. If the [[worker]] were to be used to produce more output than before, then having the worker not doing any work would be productively inefficient. [[Allocative efficiency]] is a special type of productive efficiency in which the right amount of goods is produced to benefit [[society]] in the best way. == Model == Productive efficiency can be shown either by using a production possibility frontier (PPF) [[diagram]], or by using the marginal cost and average total cost curves. === Production possibility frontier === [[File:Production Possibilities Frontier Curve.svg|thumb|253x253px|A production possibilities frontier curve]] Assuming that the economy only produces 2 goods – guns and butter. Points B, C and D on the diagram are considered to be productively efficient as it is not possible to p