Priority Encoding:
Priority encoding is a technique used in digital circuits to assign a unique code to the highest priority active input. It is commonly used in applications where multiple inputs need to be prioritized and encoded into a binary code.

Working Principle:
A priority encoder consists of multiple inputs and an output. The inputs are typically labeled as D0, D1, D2, etc., and the output provides a binary code corresponding to the highest priority active input. When multiple inputs are active simultaneously, the priority encoder assigns a code to the input with the highest priority.

Answer Explanation:
When two inputs are active on a priority encoder, the output will be coded based on the higher value input. This means that the input with the higher priority will be encoded on the output.

To understand this, let's consider a simple example of a 4-input priority encoder. The inputs are labeled as D0, D1, D2, and D3 (D0 being the highest priority). If both D2 and D3 are active, the output will be coded based on D3 because it has a higher priority than D2.

The priority encoder follows a priority order, where each input has a higher priority than the inputs below it. When multiple inputs are active, the priority encoder will prioritize the input with the highest priority and encode it on the output.

Example:
Let's consider a priority encoder with inputs D0, D1, and D2. The priority order is D0 > D1 > D2. If D1 and D2 are active simultaneously, the output will be coded based on D1 because it has a higher priority than D2. Similarly, if D0 and D2 are active simultaneously, the output will be coded based on D0.

In summary, when two inputs are active on a priority encoder, the input with the higher priority will be coded on the output. This ensures that the highest priority input is given precedence in the encoding process.