What is meant by productive efficiency?

Productive efficiency refers to a situation in which an economy or firm is producing goods and services at the lowest possible cost, utilizing all resources to their fullest extent. This concept emphasizes the optimal use of inputs to maximize output, indicating that resources are allocated in such a way that any increase in production would require an increase in resources, thereby achieving maximum productivity with the given inputs.

Maximizing output from inputs captures the essence of productive efficiency by focusing on the relationship of the resources used in production and the volume of goods produced. When a firm is productively efficient, it means that it is using its resources (like labor, materials, and machinery) in the best way possible to create the highest quantity of goods without wasting those resources.

The other choices highlight important aspects of production management but do not fully capture the definition of productive efficiency. Achieving the lowest possible cost relates more to economic efficiency as a whole, while finding the optimal mix of products and reducing waste relates to other production considerations that do not address maximizing the output specifically from the inputs in a manner defined by productive efficiency.