In a major metropolitan area, courier delivery rates vary significantly depending on the urgency of the shipment. Typical rates are:
Independent delivery couriers can choose to allocate their time and vehicles to standard delivery services, same-day premium express networks, or both.
Using the data above, which one of the following is a function of the price mechanism in this market?
Eliminating a shortage of same-day premium express services by allowing the market price of premium deliveries to fall
Incentivising independent couriers to allocate more of their labour and vehicles to the same-day premium express network
Signalling to the government that it needs to intervene to set national maximum prices for courier services
Rationing the scarce supply of delivery drivers by driving down premium rates until they match standard postal courier rates
