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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

“If price were outlawed as the rationing device used in markets, there would be no need for another rationing device to take its place. We would have reached utopia.” Discuss.

To determine

The need for a rationing device.

Explanation

The given statement is false. The need for a rationing device arises due to the scarcity of resources. We know that the human wants are unlimited though we have only limited resources. Rationing is an effective measure that allocates the limited resources to the people who want to consume them. Rationing also acts as an incentive for the producers to increase their production as they are profit driven. Without an efficient rationing device, the resource cannot be distributed and hence the given statement is not correct.

Concept

Scarcity: Scarcity refers to the limited availability of resources than the required level.

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