When the market operates without interference, price increases will distribute what is available to those who are willing and able to pay the most. This process is known as ?
Correct answer: C. price rationing
- A. Quantity setting
- B. price fixing
- C. price rationing
- D. quantity adjustment.
Explanation
Price rationing occurs when price allocates a scarce good to buyers willing and able to pay the most. Price fixing means imposing a price, so it does not describe an unregulated market process.
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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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