When prices are used as a rationing device, goods that are relatively more scarce than they used to be will have
A) greater demand.
B) lower excess demands.
C) higher prices.
D) long queues.

Question

Quizplus · Accepted Answer

When goods become more scarce, the demand for those goods will typically increase, leading to excess demand. Prices act as a signal to consumers to reduce demand and to producers to increase supply. Therefore, as scarcity increases, prices will tend to rise. This allows those willing and able to pay the higher price to purchase the goods, while those who are not willing or able to pay the higher price will reduce their demand, reducing excess demand.

When Prices Are Used as a Rationing Device, Goods That