Question

Are there any limits to economic growth in the long- run because the consumer’s greed for more consumption will exhaust all or most the Earth’s natural resources? Why or why not. (approximately 7 sentences). How do greedy profit-making speculators and the competitive price system fit into that answer? (approximately 6-7 sentences)

Answer 1

1st part:

There is no limit to economic growth, since in the long-run all factors of production and natural resources become variable. Growth could only be ascertained and availed if there are abundant resources, like the flow of raw materials, supply of labor, and timber in the forest. All these may be limited in the short-run, making the growth (in terms of production) limited; but, as the times goes on new availability of raw materials could be invented, new born baby will be grown up to take part in the labor force, and new timber trees will be grown up in the forest. Therefore, natural resources are not exhausted but re-generated by the times. One can say that “land” is also a natural resource but it can’t be increased in future; for them, the use of land could be improved so that it can be more productive.

2nd part:

The free market structure in an economy can solve this problem. The profit-making motive of suppliers constantly looks for higher production and higher growth. They search for inputs (resources), do production in increasing numbers, and increase supply as well. Scope for them is not limited in the long-run. The price-mechanism, where demand and supply meet, helps them to earn profits. They are motivated of doing further, which ultimately helps consumers meeting their needs.