Which one of the following is the best example of the rationing function of the price mechanism in a free market?
A sharp increase in the price of cobalt boosts profit margins, prompting multinational mining firms to allocate capital towards deep-sea exploration projects.
An early frost in Brazil reduces coffee yields, causing world coffee prices to rise, which alerts roasters worldwide that global stocks have fallen.
A sudden surge in demand for hotel rooms during a major sporting tournament drives up room rates, ensuring that the fixed supply of rooms is distributed only to guests who are willing and able to pay the premium.
The government caps prices on essential medical supplies during a public health emergency to prevent firms from charging excessively high prices.
16 exam-style questions on Edexcel A A Level Economics 1.2.7 Price mechanism. Each one has a worked solution and a mark scheme showing where the marks go.