When a good is limited some means must be found to ration th

When a good is limited, some means must be found to ration the scarce commodity. Some examples of rationing devices are auctions, ration coupons, and first-come first- served systems. What are the strengths and weaknesses of each? Explain carefully in what sense a market mechanism \"rations\" scarce goods and services.

Solution

Allocations are not always consider as practical , ration coupouns tend to keep price always low,If we want to use first come , first serve method, this may leads to high opportunity cost of standing in line.

In rationing . the goods will only reach to the people who can afford them.because prices of the goods rises to a point where there are no longer more buyers then sellers. Rationing occur through individual assesment of the value of the item.