Question

2. Discuss some valid and some invalid objections to letting prices eliminate shortages of supplies of scarce resources.

Answer 1

The following are invalid objections for letting the price to rise.

An alarming increase in resource prices leads to an increase in distributed volumes. Shortages were eliminated due to the increase in delivered volumes.
If scary resource values ​​are allowed, the quantity needed for these resources will likely decrease. Thus, shortages created by excessive demand can be eliminated by allowing prices to rise.

The following are valid objections for letting the price to rise.

Allowing the rising cost of scarce resources will adversely affect the use of these resources in the production process. Effective production can be affected by the rise in scary resource prices.
Therefore, if the value of scare resources is allowed to rise then total production may be constrained. Manufacturers will not use these dreadful resources in the production process due to rising prices.