Question

In a market economy, why is the rationing of goods a fact of economic life, and what form of rationing is the most prominent?

Answer 1

Ans) There is scarcity of resources and the human wants is unlimited, this situation gives rise to the need of rationing. It is artificial control on distribution of scarce resources like food, water, gas etc. It provides a way to constraint demand and regulate supply. Its purpose is to ensure proper distribution without any wastage.

There are mainly three types of rationing system:

1. Rationing by force
2. Rationing by first come first serve
3. Rationing by price control

Rationing by price control is the most prominent one as it discourage the excess consumption and ensure optimal utilisation of goods. This is one of the reason that we see the price of essential commodities are higher. Government by means of price try to distribute goods in most efficient way ensure minimum wastage.

Public distribution system is another way by which government ensures distribution of essential goods to disadvantaged groups.