Answer to Question #65783 in Microeconomics for Ebenezer Kyeremateng

Question

Scarcity and competition are more often than not linked together. When there's a limited number of slots and a large number of applicants, firms will use __________ to determine who gets what.

Answer 1

Scarcity and competition are more often than not linked together. When there's a limited number of slots and a large number of applicants, firms will use a rationing device to determine who gets what.
If some persons have infinite wants to buy goods and if limited resources are available to produce those goods, in this case a rationing device is appropriate to decide who gets that available quantity of goods. The example of a rationing device is dollar price. For example, each person wants a new car and only 100 cars are on the lot. So, the firms use dollar price to decide who gets the specific quantity of the new cars.