Productive efficiency

Productive efficiency is when the economy is working on its production possibility frontier (PPF). This is when production is achieved at the lowest cost possible, and is when average cost is at a minimume for a given amount of output. If average cost is higher, resouurces are being used inefficiently. In long-run equilibrium for a perfectly competitive market, this is where average cost is at the lowest point on the Average Cost curve. Productive efficiency can be defined as 'using the least amount of resources to produce a given good or service or output is being produced at the lowest possible unit cost.'