The government imposes a price ceiling on gasoline that is below the market price. You are asked to suggest a rationing scheme that will minimize the misallocation of resources. You suggest
A) using rationing coupons that can be resold.
B) using rationing coupons that cannot be resold.
C) using rationing on a first-come, first-served basis.
D) using rationing only on weekdays.

Question

Quizplus · Accepted Answer

Using rationing coupons that can be resold allows for the allocation of resources according to individuals' willingness to pay. Those who value the gasoline more are willing to pay more for the coupons, leading to a more efficient allocation of the scarce resource compared to non-transferable coupons or other rationing methods that do not reflect individuals' preferences as accurately.

The Government Imposes a Price Ceiling on Gasoline That Is