Rationing
Published on Jun 01, 2016
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PRESENTATION OUTLINE
Definition
Rationing is dividing up goods and services using criteria other than price
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In economics, rationing refers to an artificial control of the supply and demand of commodities.
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Description:
Whenever resources are scarce, the demand exceeds supply and prices go up. The effect of a price rise is to discourage demand and conserve resources. The greater the scarcity, the higher the price and the more the resource is rationed.
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Why?
Rationing is done to ensure the proper distribution of resources without any unwanted waste.
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Why?
Controlling the prices and demand and supply leads to availability of goods and services for every section of the society.
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Example:
Rationing can be seen in the oil market. As oil runs out, its price will rise, and this discourages demand and leads to more oil being conserved than at lower prices.
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