Rationing And Hoarding SS2 Economics Lesson Note

RATIONING

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 regulated periods. The scarcity of these essential commodities in the market may be man-made, which is known as artificial scarcity,  created majorly by some people to make super-normal profits from the sales of their goods.

EFFECTS OF RATIONING:

1. It denies some people access to essential commodities.
2. It involves struggle and uncertainty.

3. Insufficient rationing affects people’s standard of living

HOARDING

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 to make abnormal profits or by refusing to sell at the regulated lower price fixed by law for essential commodities by the government.

EFFECTS OF HOARDING:

1. It leads to artificial scarcity.
2. It makes the price go high.
3. Non-availability of goods through artificial scarcity affects the economic and material welfare of the people.

BLACK MARKET: 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 is thus shrouded in secrecy,  where the exchange of goods and services cannot be done openly. Hence, the reason why it is called black market.

EFFECTS OF BLACK MARKET:

1. It leads to the exploitation of consumers.
2. It leads to favouritism, corruption and bribery.
3. It adversely affects the growth and development of the economy.
4. It creates an avenue for abnormal profits for some producers.