Question

Effects of rationing in economics

Answer 1

Rationing distorts consumer behavior since consumers cannot purchase their desired quantities at government controlled prices. Since consumers incur smaller than desired expenditures for rationed goods and services, rationing may lead to increased demand for other commodities that can be purchased freely.

Answer 2

Effects of rationing in economics?

Rationing affects the purchasing power of the consumer and makes consumer accustomed to buy a commodity or product at a price below the market price, which can lead to a further increase or decrease in prices in the general market.

Rationing is a process in which goods or products are made available to the general public at controlled prices by the government administration, so that the general poor people can easily get the essential commodities of life.

Rationing is usually done where there is a severe shortage of a particular commodity in an area or the demand is very high. In such a situation, the local government tries to control the prices of that commodity and a fixed price is fixed by controlling the price of that commodity. The product is purchased at the same price.

The process of rationing is done for the welfare of the poor, at the time of war, at the time of economic crisis, at the time of natural calamity, to implement the schemes of public welfare.

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