Productive efficiency occurs when an economy or a business produces goods and services at the lowest possible cost. This means that resources, such as labor and materials, are utilized in the most effective way, minimizing waste. When productive efficiency is achieved, it allows for maximum output from a given set of inputs. In a state of productive efficiency, it is impossible to increase the production of one good without reducing the production of another. This concept is often illustrated using a production possibilities frontier, which shows the trade-offs between different goods. Achieving this efficiency is crucial for economic growth and competitiveness.