Can you describe the difference between potential and actualoutput - ProProfs Discuss
Advertisement

Can you describe the difference between potential and actualoutput and how the two concepts relate to each other?

Asked by Merlin, Last updated: Oct 28, 2021

+ Answer
Request
Question menu
Vote up Vote down

1 Answer

John Smith

John Smith

John Smith
John Smith

Answered Sep 08, 2016

Potential output refers to what the economy is capable of producing at full employment capacity. actual output refers to what is being produced. if actual output is below potential output, then output can be increased without undue strain on wages, etc. once you exceed potential output, its more difficult to increase activity without straining your resources. Think of it as a running race. If your average capability (i.e., potential) is to run at 10 k/hr and you are running at only 5 k/hr (i.e., actual), you arent straining your resources. in fact you can increase your speed a bit without putting too much extra pressure on yourself. but if you try to exceed 10 k/hr for a sustained period, you are straining your resources considerably.

upvote downvote
Reply 

Advertisement
Advertisement
Search for Google images Google Image Icon
Select a recommended image
Upload from your computer Loader
Image Preview
Search for Google images Google Image Icon
Select a recommended image
Upload from your computer Loader
Image Preview
Search for Google images Google Image Icon
Select a recommended image
Upload from your computer Loader

Email Sent
We have sent an email to your address "" with instructions to reset your password.