Price Elasticity Essay

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5 E’s to Reduce Scarcity The first E of economics is economic growth. Economic growth is the increase in the ability to produce more goods and services. This is caused by new resources, better resources, and better technology. For example if a large amount of oil had been found underneath Harper College that would increase our economic growth because there is an increase in new resources. Having this new resource helps to minimize scarcity. The second E is productive efficiency. Productive efficiency is using as few resources as possible when producing a product. When a business lays off workers but still is able to produce the same amount of goods that business is improving their productive The lay-offs are good for society because the laid off workers can produce more products in another company therefore reducing scarcity. For example if Coca Cola can lay off 600 workers but still produce just as many products then those workers can go work to produce more boats. The third E is allocative efficiency. Allocative efficiency means that a company uses its limited resources to produce what society wants. The resources are not wasted by making products society doesn’t want. In other words people are happier with products they want rather than products they don’t want. For example a company will use its resources to make DVDs rather than VHS tapes because a very small amount of society actually wants VHS tapes. Some companies that produce goods that society doesn’t want ends up laying off a lot of workers. The fourth E is full employment. Full

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