With reference to "Ration Coupons", consider the following statements: 1. They are issued to consumers to limit the purchase of essential goods. 2. They are typically used when the government imposes a price floor. 3. They allow consumers to buy goods from fair price shops. Which of the statements given above is/are correct?

The correct option is 1 and 3 only. Explanation Rationing is a method used by governments to distribute essential goods when supply is limited or when prices are controlled. It involves restricting the quantity of a good that consumers are allowed to purchase to ensure equitable distribution and food security. Statement-wise Analysis: - Statement 1 is Correct: Ration coupons are issued to consumers to limit the purchase of essential goods. This ensures that scarce resources are distributed fairly among the population, preventing hoarding and ensuring that everyone has access to a minimum quantity of essentials. - Statement 2 is Incorrect: Rationing is typically employed when the government imposes a price ceiling (maximum price), not a price floor. A price ceiling set below the equilibrium price creates excess demand (shortage). To manage this shortage and prevent the goods from going only to those who can pay more or arrive first, the government uses ration coupons. A price floor (minimum price) typically leads to a surplus, which does not require rationing for consumers. - Statement 3 is Correct: In the context of the Public Distribution System (PDS), ration coupons (or ration cards) allow beneficiaries to purchase subsidized food grains and other essential commodities from designated outlets known as Fair Price Shops (FPS). Key Takeaway: Ration coupons are a non-price rationing mechanism used to manage shortages caused by price ceilings, ensuring essential goods are accessible to vulnerable sections through Fair Price Shops.

With reference to "Ration Coupons",… - NCERT Class 12 Economics MCQ

NCERT Class 12 Economics — Chapter 2: Market Equilibrium

mcqeasy

With reference to "Ration Coupons", consider the following statements:

They are issued to consumers to limit the purchase of essential goods.
They are typically used when the government imposes a price floor.
They allow consumers to buy goods from fair price shops.

Which of the statements given above is/are correct?

NCERT textbook question

From NCERT Introductory Microeconomics · Page 84

Options

A1 only
B2 only
C1, 2 and 3
D1 and 3 only

Did you get this right?

Solution

The correct option is 1 and 3 only.

Explanation

Rationing is a method used by governments to distribute essential goods when supply is limited or when prices are controlled. It involves restricting the quantity of a good that consumers are allowed to purchase to ensure equitable distribution and food security.

Statement-wise Analysis:

Statement 1 is Correct: Ration coupons are issued to consumers to limit the purchase of essential goods. This ensures that scarce resources are distributed fairly among the population, preventing hoarding and ensuring that everyone has access to a minimum quantity of essentials.
Statement 2 is Incorrect: Rationing is typically employed when the government imposes a price ceiling (maximum price), not a price floor. A price ceiling set below the equilibrium price creates excess demand (shortage). To manage this shortage and prevent the goods from going only to those who can pay more or arrive first, the government uses ration coupons. A price floor (minimum price) typically leads to a surplus, which does not require rationing for consumers.
Statement 3 is Correct: In the context of the Public Distribution System (PDS), ration coupons (or ration cards) allow beneficiaries to purchase subsidized food grains and other essential commodities from designated outlets known as Fair Price Shops (FPS).

Key Takeaway:

Ration coupons are a non-price rationing mechanism used to manage shortages caused by price ceilings, ensuring essential goods are accessible to vulnerable sections through Fair Price Shops.

Your note

More from Chapter 2: Market Equilibrium

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In a market with free entry and exit, if the demand curve shifts to the left: Statements: 1. Firms will enter the market to capture the lower price. 2. The market price will temporarily fall below the minimum average cost. 3. The supply will increase until the price returns to the minimum average cost. Which of the statements given above is/are correct?

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What is the primary consequence of a price ceiling accompanied by rationing?

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