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.