In which of the following cases is productive efficiency improved?

• A. A firm raises prices to match consumer demand, without changing its production process.
• B. A firm reduces waste and produces the same output using fewer resources.
• C. A firm produces more luxury goods to increase market share, regardless of production costs.
• D. A firm increases its output by hiring more workers, but its costs per unit remain unchanged.

Answer: (B)

Verified step by step guidance

1. Understand the concept of productive efficiency: it occurs when a firm produces a given level of output at the lowest possible cost, meaning no resources are wasted in the production process.
2. Analyze each option to see if it involves producing the same output with fewer resources or lower costs, which indicates improved productive efficiency.
3. For the option where a firm raises prices without changing production, recognize that this affects pricing strategy but not the efficiency of resource use, so productive efficiency is not improved.
4. For the option where a firm reduces waste and produces the same output using fewer resources, identify this as a clear improvement in productive efficiency because the firm is minimizing input use for the same output.
5. For the other options (producing more luxury goods regardless of costs, or increasing output by hiring more workers without changing unit costs), note that these do not necessarily reduce resource use or costs per unit, so they do not indicate improved productive efficiency.