Th1.2: The Rationing Function

Question 1

How is the price system a way of rationing goods?

Answer 1

when price increases, some people will no longer be able to afford to buy the product and others may no longer have the desire to buy the good

Question 2

What can be done with the limited resources?

Answer 2

they can be rationed and allocated to the people who are able to afford them and value them most highly