Whenever a Shortage Occurs (For Example, in Parking Spaces), and the Price

question 2

Multiple Choice

Whenever a shortage occurs (for example, in parking spaces) , and the price does not rise or is not permitted to rise, some method of non-price rationing must occur (for example, driving around looking for a parking space) . Which of the following is an advantage of price rationing relative to non-price rationing methods?

• A) Economic theory indicates that price rationing leads to a less economically efficient allocation of goods.
• B) Non-price rationing techniques redistribute income from consumers to producers; price rationing does not.
• C) The demand for goods will be more elastic if price rationing is used to allocate goods.
• D) When higher prices are used to resolve shortages, the higher prices will encourage suppliers to increase the quantity available.

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Definitions:

Total Assets

The sum of all resources owned by a company, valued in monetary terms, which includes tangible and intangible items.

Owner's Equity

The amount of assets owned by a business's owner after all liabilities have been deducted.

Average Inventory

The mean amount of inventory a business holds over a certain period of time, calculated to understand inventory levels and turnover.

Financial Obligations

Commitments to pay money owed to lenders or creditors, which can include loans, leases, contracts, and other forms of debt.