Potential energy is directly related to the height of an object. Point 1 is higher than point 4, so the potential energy is greater at point 1.
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Electromagnetic or magnetic induction is the production of an electromotive force across an electrical conductor in a changing magnetic field. Michael Faraday is generally credited with the discovery of induction in 1831, and James Clerk Maxwell mathematically described it as Faraday's law of induction.
