Question

Effects of rationing in an economy

Answer 1

• The effect of such a price rise is to discourage demand, conserve resources, and spread out their use over time.

• The greater the scarcity, the higher the price and the more the resource is rationed.

Explanation:

• A rationing device— such as dollar price— is needed because scarcity exists and as a reult of scarcity, a rationing device is needed to determine who gets what of the available limited resources and goods.