All the following are methods of determing prices except?

Analyze the question: You are asked to find the option that is NOT a method of determining prices.

Explain the concept: Prices can be determined in several ways:

• Market forces: the interaction of demand and supply.
• Government price control: the government sets a maximum price (price ceiling) to protect consumers, or a minimum price (price floor) to protect producers, for example minimum prices for farm produce.
• Auctioning: buyers bid against each other, and the price is set by the highest bid. This is common for artworks, cars and government contracts.

Rationing is different. It is a method of allocating or distributing scarce goods among consumers, often when a price ceiling creates shortages. It decides who gets how much of a good, for example through coupons or quotas. It does not set the price.

Step by step:

• A. Maximum pricing: sets a price ceiling, so it is a price-determination method.
• B. Rationing: allocates goods and does not determine price, so this is the exception.
• C. Minimum pricing: sets a price floor, so it is a price-determination method.
• D. Auctioning: the price is set through bidding, so it is a price-determination method.

Answer: B.

Exam tip: Remember the difference: pricing methods set the price (ceiling, floor, bidding, market forces), while rationing shares out the goods. Whenever you see "rationing" in a pricing question, think of allocation, not price-setting.