Which term best describes a government system that restricts the quantity of items individuals are allowed to purchase, often in response to shortages?

• A. Black market
• B. Price ceiling
• C. Subsidy
• D. Rationing

Answer: (D)

Verified step by step guidance

1. Understand the context: The problem describes a government system that limits the quantity of goods individuals can buy, usually during shortages.
2. Recall definitions: A 'black market' is an illegal market for goods sold outside government controls; a 'price ceiling' is a legal maximum price set below equilibrium; a 'subsidy' is financial aid to reduce costs.
3. Identify the key feature: The system restricts quantity, not price or cost, which points toward a method that allocates limited goods fairly.
4. Recognize that 'rationing' is the term used when the government controls the amount of a good each person can purchase to manage shortages.
5. Conclude that the best term describing this system is 'rationing' because it directly involves limiting quantities to consumers.