This is a prevailing economic situation of scarcity of essential commodities in the market in which consumers are allowed to have access to these commodities at specified quantities and at regulated period of times. The scarcity of these essential commodities in the market may be man – made, and which is known as artificial scarcity, created majorly by some people to make super- normal profits from the sales of their goods.
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Effects of Rationing
- It denies some people access to essential commodities
- It involves struggle and uncertainty
- Insufficient rationing affects people standard of living
This is a situation in which a deliberate effort is made by a seller or a producer of a particular commodity who decides to create artificial scarcity of such commodity by keeping it locked up in his store and not releasing it to the market to circulate for sales. Hoarding of essential goods can be done deliberately to push the selling price of commodities up for the purpose of making abnormal profits or by refusing to sell at the regulated lower price fixed by law for essential commodities by the government.
Effects of Hoarding
- It leads to artificial scarcity.
- It makes price to go high.
- Non-availability of goods through artificial scarcity affects economic and material welfares of the people.
This is a market situation where trading transactions and allocation of resources are being carried on outside the conventional norm or principle of market forces of demand and supply or the price fixed by law for essential commodities by the government. This is a market pattern which does not abide by the simple principle of the market forces of demand and supply, and thus shrouded in secrecy, where exchange of goods and services cannot be done openly. Hence, the reason why it is called black market.
Effects of Black Market
- It leads to exploitation of consumers.
- It leads to favouritism, corruption and bribery.
- It adversely affects the growth and development of the economic.
- It creates an avenue for abnormal profits for some producers.
- How does black market affect the economic growth and development of a Country?
- Explain hoarding in relation to people material welfares.
GENERAL EVALUATION QUESTIONS
- Give five reasons why Government participates in business enterprises.
- Define ageing population.
- Explain the sources of Finance available to a public limited liability business.
- Explain any three weapons that can be used by a trade union during trade dispute.
- What is occupational mobility?
- One of the major effects of hoarding is…………….. (a) availability of goods (b) struggle and uncertainty (c) increase in price (d) enjoyment of consumers
- When the price fixed by law is below the equilibrium price, then the policy is,,,,,,,,,,,, (a) minimum price control (b) normal price control (c) maximum price control (d) abnormal price control
- A deliberate effort to create artificial scarcity of commodities is called……. (a) rationing (b) black market (c) hoarding (d) bargaining
- When an exchange of goods and services does not abide by the conventional principle of market forces of demand and supply or price fixed by law, such an exchange is termed……………. (a) rationing (b) black market (c) hoarding (d) auctioning
- The practice of favouritism is a common effect in………….. (a) hoarding (b) auctioning (c) rationing (d) black market
- What is black market?
- State the difference between hoarding and rationing.