Productive efficiency is an economic concept that refers to the maximum output of a product that can be produced given scarce resources. It is concerned with producing goods and services with the optimal combination of inputs to produce maximum output for the minimum cost. Productive efficiency is achieved when an economy or business operates at the lowest point on the short-run average cost curve, where marginal cost meets average cost. In other words, it is impossible to produce more of one good without producing less of another. Productive efficiency is closely related to the concept of technical efficiency, which means that a firm combines the optimal combination of labor and capital to produce a good.

Productive efficiency is an aspect of economic efficiency that focuses on how to maximize output of a chosen product portfolio, without concern for whether the product portfolio is making goods in the right proportion. However, it is important to note that an economy can be productively efficient but have very poor allocative efficiency, which is concerned with the optimal distribution of resources.

To achieve productive efficiency, an economy or business must operate using best-practice technological and managerial processes, and there should be no further reallocation that brings more output with the same inputs and the same production technology. By improving these processes, an economy or business can extend its production possibility frontier outward, so that efficient production yields more output than previously.

In summary, productive efficiency is an economic concept that refers to the maximum output of a product that can be produced given scarce resources. It is achieved when an economy or business operates at the lowest point on the short-run average cost curve, where marginal cost meets average cost, and it is closely related to the concept of technical efficiency.