Asked by Owuraku Agyekum on May 04, 2024
Verified
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.
Rationing Coupons
Tickets or certificates that allow the holder to purchase a certain amount of a product or service, used especially in times of shortages to ensure equitable distribution.
Misallocation
The inefficient distribution or use of resources in an economy, often resulting from market failures or government intervention.
Resources
Assets, materials, and inputs needed for the production of goods and services, including time, labor, capital, and natural resources.
- Acknowledge the contribution of nonprice rationing schemes in dealing with excess demand situations.
- Explore various nonprice rationing mechanisms and their efficiency in resource allocation.
Verified Answer
CS
Chisha SulweMay 10, 2024
Final Answer :
A
Explanation :
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.
Learning Objectives
- Acknowledge the contribution of nonprice rationing schemes in dealing with excess demand situations.
- Explore various nonprice rationing mechanisms and their efficiency in resource allocation.