Economics Homework Help

This week’s discussion topic is about Price Gouging. Price gouging occurs only under a narrow set of legally defined circumstances. Price gouging is a legal concept, not an economic concept.

When a natural disaster occurs and the governor of the state declares a state of emergency then the price gouging law of that state will go into effect, but only if the state has such a law.

The economic effect of price gouging laws is to put a Price Ceiling on all goods and services covered by the state’s price gouging law. Price ceilings always cause shortages.

Assignment Summary:

1. Read “Florida Lawsuits Allege Price Gouging,” and “They Clapped: Can Price-Gouging Laws Prohibit Scarcity?”
2. Read the article from Chapter 4 in your textbook: “In the News: Price Increases after Disasters” (pages 80-81).
3. Also read the article –  The Problem with Price Gouging Laws The Problem with Price Gouging Laws – Alternative Formats .
4. Watch the Price Gouging videos above.
5. Summarize the main points of each article and decide which graph (A, B, C, or D) can be used to explain each event and why – be specific. More than one graph may apply. ( SupplyAndDemandGraphs2.doc Supply and Demand Guide – Alternative Formats  and  Supply and Demand Graphs.pptx Supply and Demand Powerpoints – Alternative Formats )
6. What is your conclusion? Is price gouging a good thing or not? Or is it just necessary? Explain why.
7. Refer to two different concepts and include an explanation why you think they are relevant to the topic using specific information from the articles, videos and other research that you have done
8. PART 2
9. Reply to these two classmates with 150-word count each 
10. Saphrianece – In the article it states that back in 2004, attorney Charlie Crist and his office was investigating at least 1,200 complaints of price gouging. The gouging happened during the disaster of Hurricane Charley. Two hotels, “Days Inn,” located in West Palm Beach and “Crossroads Motor Lodge,” located in Lakeland were both under the investigation for price gouging. Crossroads Motor Lodge had advertised their rooms for less than $45 per night but buyers had difficulty getting their rooms. The Days Inn was charging three buyers more than double the price they seen on a billboard, that advertised the Days Inn at less than $50 per night. Each of the three consumers all purchased the room in sense of urgency because they were told that there was “only two rooms left.” The graph that can be used to explain this event is Graph A. Graph A explains that a consumer would be willing to pay more for the quantities of the good. The consumers at both hotels did just that because they were all in desperate need of somewhere to stay due to the nature of the disaster. My conclusion is that price gouging can either be a good or bad thing. I say a good thing for the business because it brings them more money but, also a bad thing because it can get them into legal trouble. I also say bad thing because of the people who cannot afford to pay the price at the time.
11. Trinity – I personally found both of the articles that we read were very interesting and offered different perspectives on the same topic. Article one, Florida lawsuits Allege Price Gouging, I found particularly interesting as I have lived in Florida all my life and am far too familiar with hurricanes and attempted price gouging. This article was about price gouging on hotels during Hurricane Charley. This is both ethically and legally wrong. Businesses are not allowed to raise the prices during times of crisis. I feel that graph D was the most representative of this situation. The business raised the prices after advertising a lower price, and due to the severe need for housing, people were willing to pay that price. In the second article, They Clapped: Can Price-Gouging Laws Prohibit Scarcity, the main discussion point was about the scalpers selling ice at absurd prices during the aftermath of another hurricane. But due to the high heat index and humidity, people were willing to pay the high prices for ice. The people clapped when authorities came to put the price-gouging to rest. I believe graph A is the best representative of the situation. The demand for ice was growing by the hour and these scalpers found a way to bring in more supply. Even after reading the article, In the News: Price Increases after Natural Disasters, my opinion on price-gouging remains unchanged. Price-gouging is and should remain illegal. It is immoral and businesses should not be allowed to pry on people when they are at their most vulnerable.