Rationing

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 Rationing

From the point of view of maximizing welfare  points rationing which gives each consumer some  fixed umber of ration points) is better than fixed rationing  which permits a consumer to buy only a fixed quantity of each commodity. This is so because the  points rationing gives a consumer a wide choice n making his purchases even though his total consume  son is restricted. The ration points will replace   he money prices. Welfare will be maximized when each consumer purchases commodities in such   proportions that the marginal rate of substitution any of one commodity  for another will be equal to the   ratio of their fixed point prices. The marginal rates of substitution  for all consumers must be the same.

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Rationing