ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Potential output is the maximum amount of goods and services an economy can turn out when it is most efficient-that is, at full capacity. Often, potential output is referred to as the production capacity of the economy.

Detailed explanation-2: -Economic efficiency implies an economic state in which every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency. When an economy is economically efficient, any changes made to assist one entity would harm another.

Detailed explanation-3: -The production possibilities curve illustrates the maximum possible output for two products when there are limited resources. It also illustrates the opportunity cost of making decisions about allocating resources.

Detailed explanation-4: -Production efficiency is an economic term describing a level at which an economy or entity can no longer produce additional amounts of a good without lowering the production level of another product. This happens when production is reportedly occurring along a production possibility frontier (PPF).