Question

Lines
a. Are preferred over lists
b. Are a non-price rationing mechanism
c. Involve opportunity cost
d. Both b and c
e. All of the above

Answer 1

e All of the above

Lines are a non price rationing mechanism and also involves opportunity cost.

First, they are non price rationing mechanism because those who stand in long queues goods are sort of rationed to them, one at the first place of the queue get good first and may be of better quality. He may also be with the highest willingness to pay that why at the first place (exogenous ordering) or may have come very early to get the rationed good first. Moreover, when there is acute scarcity or the good has to be made available at the affordable rates the good is rationed at ration shops and people stand in lines for it.

Second, it involves opportunity costs and trade offs. There is opportunity cost of time, waiting, leisure and purchase of other goods involved while a person is standing in line to get the good he she wants.Now it depends on the person which he values more and is ready to trade off.

Third, lines are preferred over list because first its combersome, time consuming to prepare lists for the goods to be rationed to the potential consumers, involves data collection and a whole decision process to obtain a comprehensive list and may also entails chances of various types of biases which are avoided in lines as there is self selection and entire choice lies with the consumer and not third party deciding on their behalf.