In a free market economy, the allocation of resources and the rationing of scarce goods are primarily determined by the price mechanism.

Prices are set by the forces of supply and demand, and they act as signals to both producers and consumers.

As prices change, they guide individuals and businesses in making decisions about what to produce, how much to produce, and how much to consume.

The government may have a role in ensuring fair competition and preventing market failures, but the fundamental mechanism for rationing in a free market is through prices.