When output occurs at a point where average costs are lowest (the lowest point on the average cost curve) and all resources are fully utilised in production (actual production will position output at a point on the PPF).
Below is a diagram to show how individual firms and an economy achieve productive efficiency. For individual firms, they are charging a price at the lowest point of the average cost curve which means they are producing goods at their most productive point. For the economy to be productively efficient all firms have to be using all factors of production in the most efficient way and hence lie on the frontier of the PPF.
