AS Paper 1, November 2020Introduction to Markets and Market Failure
AS Paper 1, November 2020, Q1(b)
Which one of the following is the best example of the rationing function of the price mechanism?
Multiple choice1 mark
AAn increase in demand, leading to a rise in price, will encourage new firms to enter the market
BChanges in price provide information to both producers and consumers
CIf a product is scarce, a rise in price is likely to make the shortage worse
DWhen there is a shortage of a product, the price will rise and discourage