In a free,competitive market,what is the rationing mechanism?
A)seller bias
B)buyer bias
C)government law
D)price

Question

Quizplus · Accepted Answer

In a free, competitive market, the rationing mechanism is price. The price of a good or service determines how much of it is demanded and supplied, and therefore allocates scarce resources among competing uses. As the price of a good or service rises, demand for it tends to decrease, while supply tends to increase, until a market equilibrium is reached where quantity demanded equals quantity supplied. This mechanism ensures that resources are efficiently allocated to their highest-valued uses, as determined by consumers' willingness to pay and producers' costs. Seller bias, buyer bias, and government law can affect the market outcome, but they do not determine the rationing mechanism.

In a Free,competitive Market,what Is the Rationing Mechanism