In economic terms, what is a scenario where resources are used to their fullest potential called?

The scenario where resources are used to their fullest potential is referred to as productive efficiency. This concept arises when an economy or a firm is operating on its production possibilities frontier (PPF), meaning that it is maximizing output with the available resources and technology. In this state, it is impossible to produce more of one good without sacrificing the production of another good; thus, all resources are being utilized efficiently.

Productive efficiency is crucial because it indicates that an economy is making the best use of its inputs, ultimately leading to higher total output. In contrast, the other concepts listed pertain to different aspects of economic efficiency. Allocative efficiency refers to the allocation of resources in such a way that maximizes consumer satisfaction. Market efficiency involves the optimal distribution of goods and services in a market, while equilibrium refers to a state where supply equals demand. These distinctions help underline why productive efficiency specifically relates to the fullest utilization of resources.