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.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
But Muriel will always remember the off-beat moments of wartime food rationing.
The final lifting of 14 years' food rationing was marked with the lighting of celebratory bonfires of rationing books.
Scholars of food rationing in Germany acknowledge that the German population, unlike the British, suffered from serious food shortages during the First World War.
This did not end with the war and although more foods were coming into the country, food rationing did not completely finish until 1954.