In a free market system, what is the mechanism for rationing scarce resources?

Question

Quizplus · Accepted Answer

In a free market system, prices act as the mechanism for rationing scarce resources. As demand for a scarce resource increases, its price will also increase, signaling to consumers that they should reduce their consumption, and signaling to producers that they should increase supply. This allows the market to reach an equilibrium where supply and demand are balanced at the market price. The government does not play a direct role in this process, and while sellers and buyers do affect prices, they are not the primary mechanism for rationing resources.

In a Free Market System, What Is the Mechanism for Rationing