"Scarcity implies that some way of rationing goods must be found." Explain what this statement means. How is this rationing done?
What will be an ideal response?
Scarcity means that there are not enough goods and services to satisfy unlimited human wants. When more people want something than can have it, some way must be found to determine who gets the available units. This process is rationing. Rationing can be done by using prices to ration a good to those most willing and able to pay the highest price. First-come-first-served rations by queues, lotteries ration on the basis of chance, discrimination rations on the basis of racial, ethnic, or gender preferences, and so on.
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Which of the following is TRUE?
a. To reduce cannibalization among products, reposition a product so that it does not directly compete with the other b. After acquiring a substitute product, lower prices on both the products c. After acquiring a complementary product, raise prices on both the products d. None of the above
Ceteris paribus, a decrease in the price of a good will cause the: a. quantity demanded of the good to decrease
b. quantity supplied of the good to increase. c. consumer surplus derived from the good to increase. d. supply of the good to decrease.