Prices provide the rationing function best when
A)prices are flexible.
B)prices are inflexible.
C)they are used in conjunction with queuing.
D)price controls are in place and ration coupons are used too.

Question

Quizplus · Accepted Answer

Prices are most effective at rationing goods and services when they are flexible, meaning they can adjust freely with changes in supply and demand. When prices are inflexible or fixed, they can lead to shortages or surpluses and fail to allocate goods and services efficiently. Using queuing in conjunction with prices can help ensure that those willing to pay the highest price get access to the good or service first, but it can also lead to long wait times and inefficiencies. Price controls and ration coupons, on the other hand, are generally less effective at allocating goods and services than flexible prices because they create distortions and can lead to black markets or other forms of illegal activity.

Prices Provide the Rationing Function Best When