rationing function of prices.
The synchronization of decisions by buyers and sellers that leads to equilibrium
There are ways other than price to ration goods.
1. First come, first served
- 2. Political power
- 3. Physical force
- 4. Cultural, religious, and physical differences have been and are used as rationing devices throughout the world.
Economists cannot say which system of rationing is “best.” They can,however, say that rationing via the price system
leads to the most efficient
use of available resources.
The rationing function of prices is prevented when governments impose price controls.