Question

6. Explain what you understand by the following: a. Sustainability b. intergenerational equity c. static efficiency d. dynamic efficiency

Answer 1

a. Sustainability:-

• Sustainability is an important economic concept which refers to the carefully utilisation of scarce resources for the future needs.
• It is the process of maintaining ecological balance in the economy to avoid the depletion of natural resources and to enhance the present and future needs and expectations of people.

b. Integrational equity:-

• The concept of intergrationi equity specifies the equity maintained between the various generations.
• According to this concept the earth is shared equally by all the past, present and future generations.
• It states that the natural and cultural environment remains common over all generations.

c. Static efficiency:-

• Static efficiency refers to the productive or the allocative efficiency achieved by allocating resources at any point of time.
• For example:- if a firm can prouduce more toys cheaply with more labour and less capital then it is said to have static efficiency.

d. Dynamic efficiency:-

• Dynamic efficiency refers to the productive efficiency achieved over a period of time rather than at any point of time.
• It is the concept related to making one generation better off by making another generation worse off. This is also termed as the golden rule of saving.