Which of the following situation would result in actual output being less than the potential output?

When the given resources are not fully utilised

The Correct Answer is option 1: When the given resources are not fully utilised

When resources are not fully utilized, it means that there are idle resources or factors of production that are not being used efficiently to produce goods and services. This inefficiency leads to a lower level of output than what could be produced if all resources were fully utilized.

If the resources are extra efficient or there is an increase in the technology due to import of the same, that would result in increase in the production or reaching near to the potential output limit of the economy. 

Note: In the context of the question, we are comparing actual output with potential output — and the key focus is on resource utilisation, not production costs.Potential output is based on the maximum output possible when all resources are fully and efficiently used, given the available technology. Higher production costs may affect profitability, but they do not necessarily reduce actual output unless they lead to under-utilisation of resources. So, unless the increased costs cause some resources to remain idle or underused, they do not directly result in actual output being less than potential output. That's why Option 1 is correct, and Option 4 is not, as the reasoning in Option 3 does not directly relate to the actual vs. potential output gap.