It is necessary to ration a good whenever ?
Correct answer: D. demand exceeds supply
- A. supply exceeds demand
- B. a surplus exists
- C. there is perfectly inelastic demand for the good
- D. demand exceeds supply
Explanation
Rationing is needed when demand exceeds the available supply, because not every willing buyer can obtain the good at the prevailing price. This situation is a shortage rather than a surplus.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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