Question

A. After the Arab oil embargo in the early 1970s, the government set up a contingency plan that included rationing gasoline, so ration coupons were printed in case the plan was ever implemented. Some proposed that if the plan was implemented, consumers should be permitted to buy/sell coupons legally. Others disagreed and said it should be illegal. Which plan would be the most likely to be efficient? Why?

B. The Los Angeles Lakes were the champions of the National Basketball Association during the 1999-2000 season. Two of the Lakers leading players, Shaquille O’Neal and Kobe Bryant, made 57% and 44% respectively, of the field goal shots they took on the way to capturing the championship. Given these different marginal products, wouldn’t the Lakers have done even better in terms of overall scoring had O’Neal taken more shots and Bryant fewer?

Answer 1

Rationing has always been an illegal practice and would to much chaos in the market. If the contingency plan included rationing gasoline, it would lead to illegal extrapolating the demand of the gasoline by the vendors in order to get high proportion of gasoline from the government.

If being done judiciously, Rationing is quite beneficial but when when illegal practices are being used by the vendors, it creates a complete chaos in the market. So issuing of rationing coupons would not be efficient.