Question

Effects of rationing and hoarding in a country

Answer 1

Answer:

Rationing distorts consumer behavior since consumers cannot purchase their desired quantities at government controlled prices. ... In the short-run with supply fixed, the price of the hoarded good would increase. With every increase-in demand, the price of the hoarded good would continue rising producing inflation.

Explanation:

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Answer 2

Effects of rationing and hoarding in a country.

Explanation:

There are different effects of rationing and hoarding in an economy.

The effects of rationing can be:

• Limited availability of products to the customers.
• Some people might not get the products as the products are limited in supply.
• Rationing can result in scarcity when the population increases.
• Improper rationing can badly affect the standard of living of people.

The effects of hoarding can be:

• Black marketing of products
• Selling the same product at a higher price.
• Creating fake demand amidst scarcity.
• Unavailability of commodities due to the unnecessary stocks maintained by the traders.