Question

The rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market.
(A) True
(B) False

Answer 1

Answer: false

Explanation: The rationing function of price describes the way in which the use of price is done for rationing of several scarce resource. This is done automatically by the market forces of demand and supply as when the demand for a commodity exceeds its supply the price of the commodity rises leading to decrease in demand.

Thus, rationing function states to ration the goods and distribute them carefully and not to distribute the surplus amount.