Potentiometers work by varying the position of a sliding contact across a uniform resistance. In a potentiometer, the entire input voltage is applied across the whole length of the resistor, and the output voltage is the voltage drop between the fixed and sliding contact. A potentiometer has the two terminals of the input source fixed to the end of the resistor. To adjust the output voltage the sliding contact gets moved along the resistor on the output side. There are two main types of potentiometers:

Rotary potentiometer
Linear potentiometer
Although the basic constructional features of these potentiometers vary, the working principle of both of these types of potentiometers is the same.

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Thumbnail: Potentiometer Part 1