rationing

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Rationingclick for a larger image
Fig. 165 Rationing.

rationing

a physical method of allocating a product that is in short supply relative to demand (EXCESS DEMAND). In a free market this situation would not arise - the excess demand would be ‘choked off and additional supply encouraged by an increase in the price of the product (see EQUILIBRIUM MARKET PRICE). But if the price is fixed below its equilibrium rate (for example, by the government wishing to hold down the prices of key products such as food), the use of ration tickets provides one practical means of allocating the available supply between consumers on an equitable basis.

In Fig. 165, for example, if the price of a product is fixed by the government at Or, then it is necessary to ration the amount of output that producers are willing to supply, OQr, at this price amongst consumers who are demanding the greater amount of OQs. See also BLACK MARKET, PRICE CONTROLS.

References in periodicals archive ?
Jan 1940: Food rationing begins, starting with bacon, ham, sugar and butter.
Scholars of food rationing in Germany acknowledge that the German population, unlike the British, suffered from serious food shortages during the First World War.
Food rationing was introduced in January 1940 and the first targets for rationing were butter and bacon, but it soon spread to many other foods.
Moreover, if food rations are stopped, thousands of local people who work within the food rationing system, like the shops that distribute the rations, workers who unload them from the trucks, and the truck drivers, will become unemployed.
DURING the war, the British population survived on food rationing as well as sweets and chocolate; even clothes required coupons.