Productive efficiency is achieved when firms produce the goods and services that consumers value most. firms produce goods and services at the lowest cost. there are no shortages or surpluses in the market. firms add a low profit margin to the goods and services they produce.
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Productive efficiency happens when a firm utilizes its resources in such a way that it can't produce more of one good without reducing the quantity of another. Think of it like a chef perfectly timing dishes in a busy restaurant – each dish comes out hot and fresh without wasting any ingredients! This means that firms are maximizing their output at the lowest possible cost, much like an efficient factory line. In the real world, companies that achieve productive efficiency tend to have a competitive edge. For instance, a car manufacturer that streamlines its production processes will be able to offer lower prices while maintaining quality. This often translates to bigger sales, happier customers, and even more resources to invest in innovation. So, productive efficiency not only benefits the firm but consumers as well!
