When a good is scarce,
A) this indicates that producers are withholding output so they can raise the price of the good.
B) some method must be used to allocate the good among users.
C) price is one way to ration the good.
D) both b and c are correct.
E) all of the above are correct.

Question

Quizplus · Accepted Answer

When a good is scarce, there is not enough of it to satisfy everyone's wants and needs. Therefore, some method must be used to allocate the good among users. Price is one way to ration the good, as it signals to consumers the scarcity of the good and encourages them to use it wisely. However, this does not necessarily mean that producers are withholding output to raise prices. Therefore, only options B and C are correct, making choice D the best answer.

When a Good Is Scarce