Prices can achieve the rationing function when
A) prices are flexible.
B) prices are inflexible.
C) they are controlled by the government.
D) price controls are in place and ration coupons are used too.

Question

Quizplus · Accepted Answer

Prices can achieve the rationing function when they are flexible. When prices are allowed to fluctuate based on supply and demand, they serve as a signal to consumers about the scarcity or abundance of a particular good or service. As the price increases, consumers will naturally consume less, allowing the available supply to stretch further and serve those who are willing to pay the market price. This effectively rations the available supply without the need for government intervention or the use of coupons.

Prices Can Achieve the Rationing Function When