Economics and the Rationing of Goods and Services

Douglas Ruby describes the science of economics as "the study of social behavior guiding in the allocation of scarce resources to meet the unlimited needs and desires of the individual members of a given society." In other words it is the study of supply and demand.

The rationing of a given product or service has a direct impact on the both of the preceding concepts. The supply to consumers goes down while the demand from consumers goes up.

There are two ways in which rationing can be implemented to have an effect. The first is by fixing the amount of goods or services in relation to other goods or services. If one requires sugar to make cookies and the price of sugar is low while the price of eggs and chocolate chips are high, little sugar will be sold for the baking of cookies. On the other hand, if sugar is similar in price to these other products, it is likely that those who wish to have cookies will spend the money required. The distribution of cookies and the price of the ingredients will be reflected in the final cost of the product. If they are cheap, they will be distributed everywhere. If they are expensive they will probably have a higher sales margin in an affluent community.

The second way that rationing may be implemented is through the allocation of a fixed level or amount of a given product among different classes. If the production of the ingredients to cookies is fixed this will have an effect on the supply. Around the holidays, the demand will be higher for these ingredients and thus so will the price. During the rest of the year, the fixed production will probably yield an adequate amount of ingredients and the price will be down.

Rationing has a tremendous effect on the sale of a given product. Collectables are collectables because of rationing. Supply and demand is at the heart of all economics and when the supply is affected by rationing, then so is the demand.

Bibliography

Ruby, Douglas A. "Economics as a Social Science." The Digital Economist. www.digitaleconomist.com/economics.html