The 5Es are Economic growth, productive Efficiency, allocative Efficiency, full Employment, and Equity. Economic growth is the ability to increase production in the economy overall. Productive efficiency is using the least amount of resources when producing products. Allocative efficiency is the allocation of resources from a product that is less demanded to one that is more demanded. Full employment is using all the resources that are available. Equity is fairly distributing products among the economy. All of these concepts can maximize satisfaction and affect scarcity positively.
Economic growth is very different from efficiency. Economic growth is the ability to increase the production of goods overall in an economy while efficiency is a better use of resources to produce the optimal number of goods. Economic growth is practically a solution to scarcity and greatly maximizes satisfaction. By having the ability to produce more products overall, the production possibilities curve is shifted outwards, which proves that the products are less scarce. However, scarcity can never be fully eliminated, unless their is unlimited supply available. Economic growth maximizes satisfaction, as by having more resources and improved technology, business opportunities are opened up, and entrepreneurial ability can be exhibited.
Using the least possible amount of resources to produce a good is a very efficient way to save capital. This is productive efficiency. It improves scarcity, as by using less resources to produce one unit of a product, more units can be produced. It also improves maximum satisfaction from the resources that are currently available. Improvements in technology can also help with productive efficiency.
Another way to efficiently use resources is to allocate them. Allocative Efficiency is the allocation of resources from one less demanded good, to another one that has a higher demand. In order to receive the maximum satisfaction from resources,...
Please join StudyMode to read the full document