Productive+Efficiency

Productive Efficiency Productive Effiency is producing items at the bottom of the average total cost curve. In english, that means, porducing items at the least cost to the producer. For a business to be productively efficient, they must make the best use of the scarce resources, land, labor, capital and entrepreurial ability. On a production possibilities curve, you would be at the frontier of the curve and be there at the cheapest possible price if you were producing two goods. An example of productive efficiency is that many steel companies have come up with the quickest possible ways of producing steel and therefore, they take much less time and use less resources to produce the same amount of steel as they were producing earlier. Another example is that McDonalds has become very good at making cheap hamburgers very fast. They are also productively efficient because they make the best use of their scarce resources to produce hamburgers.

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This video shows a machine making chain link fence that claims to be as prductively efficient as possible. Photo



If your company is producing two products and you are on the frontier of the production possibilities curve, you are productivly efficient.

Links http://www.thetimes100.co.uk/theory/theory--productive-efficiency--255.php http://en.wikipedia.org/wiki/Productive_efficiency http://www.pubmedcentral.nih.gov/articlerender.fcgi?artid=1115526

For the third link, make sure to scroll down!!

Quiz How much wood could a woodchuck chuck if a woodchuck could chuck wood, assuming he was productively efficient?(Answer Below)

A) No Wood B) Some Wood C) All the wood he was given D) He gave up and played videogames

Answer: C