Rationing

AAA

DEFINITION of 'Rationing'

The artificial restriction of raw materials, goods or services. Rationing commonly occurs when governments fear a shortage and want to make sure people have access to necessities, such as after a natural disaster or during a war. Governments can also impose rationing in the face of failed policies such as central planning, or may be forced to use rationing as a result of shortages.

INVESTOPEDIA EXPLAINS 'Rationing'

For example, during World War II, the U.S. government imposed rationing on the country so that sufficient materials and production capabilities would be available to the military. It did not matter how much of an item an individual or family wanted or could afford to purchase; people were only allowed to purchase a limited amount specified by the government and controlled by ration coupons. Items including tires, gasoline, sugar, meat, butter and many others were subject to rationing.


Rationing can lead to the creation of black markets for the rationed goods. Black markets allow individuals to use their allotment of a rationed good that they don't need to obtain more of a rationed good that they do need.



RELATED TERMS
  1. Black Market

    Economic activity that takes place outside government-sanctioned ...
  2. Gray Market

    An unofficial market where securities are traded. Gray (or “grey”) ...
  3. Law Of Supply

    A microeconomic law stating that, all other factors being equal, ...
  4. Law Of Demand

    A microeconomic law that states that, all other factors being ...
  5. Price Ceiling

    The maximum price a seller is allowed to charge for a product ...
  6. Black Economy

    The segment of a country's economic activity that is derived ...
Related Articles
  1. Understanding Supply-Side Economics
    Economics

    Understanding Supply-Side Economics

  2. What Determines Gas Prices?
    Economics

    What Determines Gas Prices?

  3. State-Run Economies: From Public To ...
    Personal Finance

    State-Run Economies: From Public To ...

  4. What methods can the government use ...
    Bonds & Fixed Income

    What methods can the government use ...

Hot Definitions
  1. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  2. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  3. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  4. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  5. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
  6. Earnings Multiplier

    An adjustment made to a company's P/E ratio that takes into account current interest rates. The earnings multiplier is used ...
Trading Center