Supply & Demand

Rationing During a Blizzard

A blizzard hits the St. Louis area and customers are lined up to purchase items they now need. Garrett announces that the store has decided to ration all types of water rather than raise prices in an attempt to prevent people from hoarding water. Another alternative allocation mechanism would be to raise prices, but they have opted instead for an authoritarian approach. As Garrett names the different products under rationing, we also get a list of substitute products which shows the range of product differentiation at the store.