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Microeconomics

13th Edition
Roger A. Arnold
ISBN: 9781337617406

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Microeconomics

13th Edition
Roger A. Arnold
ISBN: 9781337617406
Textbook Problem

If the equilibrium price is $400 for an aisle seat and $350 for a middle seat but an airlines company charges $350 for each seat, we would expect a shortage to appear in the aisle seat market. (More people will want aisle seats than there are aisle seats available.) How will the airlines decide who gets an aisle seat?

To determine

The need for a rationing device.

Explanation

In the given situation there is excess demand for the aisle seat. However, the number of aisle seats is fixed. This scarcity of the seats gives rise to a shortage for the aisle seats. This shortage can be effectively solved with the help of a rationing device. Since the price of the seats is fixed, price cannot be a rationing device in this situation...

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