In this article about so called “price gouging”, Paul Stossel argues that increasing/“gouging” prices during an emergency actually is beneficial to proper market functioning. The main argument Stossel makes opposes that of Texas Attorney General Ken Paxton, who set severe punishments for those guilty of price gouging. Stossel examines why this is illogical, backing his thesis with evidence including supply and demand, black markets, and more. Firstly, the punishments for increased prices on essential goods seen in Texas during the threat of Hurricane Harvey displayed a lack of understanding in economics, specifically supply and demand. The unusual increase in price for essential goods is used as a preventive measure, disallowing the gross …show more content…
Because people are conscious of goods valuable to surviving the hurricane, there is an influx in the number of consumers for these goods. Number of consumers is one of the things that changes demand. In this case there is an increase in the number of consumers, demand will increase. The effects of this can be displayed on a supply and demand graph. Although demand increases, supply will remain the same because there is still the same amount of essential goods. On the supply and demand graph, the Demand line is the downward sloping due to the Law of Diminishing Marginal Utility, which states that Marginal Utility (extra utility) decreases the more you obtain of something, and the Supply line is positively sloped due to the Law of Increasing Opportunity Costs (the more you make of something, the more expensive it is to produce). In this example, increased demand leads to a shift right of the demand curve creating a change in Quantity Supplied. After inspecting the shift, you can notice that price indeed skyrockets and people are accessing as much of the resource as they can, noted by the shift in quantity. This evidence proves Stossel’s point that this trend of “price gouging” is not harmful to the economy, but in fact necessary to allow proper market
Every day, prices of products that we need continue to go up and up. Simple things like bread and tea go up for reasons that at first seem unknown. These High prices make it hard for many families to make ends meet. At the root of this problem there are many factors like inflation, over priced mark-up, and quantity of the product. But the one thing that should not lead to higher prices is shoplifting.
Price gouging is increasing the price of a product during crisis or disaster. The price is increased due to temporal increase in demand while supply remains constrained. In many jurisdictions, price gauging is widely considered as immoral and is illegal. However, from a market point of view, price gouging is a correct outcome of an efficient market.
Instead of putting money back into reinvest in Galveston “they focused their attention on Houston after the discovery of oil in Beaumont in 1901and the dredging of the Houston ship channel in 1909” (Murnane). Galveston never really came back to full after the hurricane because the “oil was discovered in Houston soon afterwards, … Texas’ economic momentum shifted, and Galveston became a beach town.”
Minimum wage workers are enthusiastic about Obama’s plan, but small businesses and the unemployed are not so happy about it. This proposal however is a binding price floor, which is a price minimum, in this case, established by the government. This will incentivize more people to search for work while disencouraging firms to hire new workers or even maintain their current ones. This is an example of a surplus. A surplus is “A situation in which quantity supplied is greater than quantity demanded” (Mankiw 7-1c). In this case, quanti...
There were many things destroyed and many people displaced from their homes and family. Studies show more than 400,000 people in the New Orleans and Mississippi Gulf area were forced to travel away from everything they knew (Katrina Displaced 400,000, Study Says). The emotional damage of the storm is not something easily communicated but the financial toll calculated is somewhere around $96-$125 billion, the insurance losses were looked at at around half that (Hurricane Katrina Damage Facts and Economic Effects). With so many people not where they should be and facing the financial hardships of the storm’s aftermath, the economy suffered. As well as the oil and gas pipelines damaged in the storm and unattainable through the debris. All these costs affected production, sales, and caused the Gross Domestic Product and economic growth to change from 3.8% to 1.3% by the October-December quarter. Total estimated costs to property was es...
... people trying to stock up for the storm. Since people did this, some people with not much money had to scavenge for food because when they got to the super markets they, had no food. Some long terms effects of sandy were; people’s homes were destroyed, just imagine if your house was destroyed in the middle of a hurricane and you had no shelter, you would have wind blowing in your face and have rain dripping down your face. It would be traumatic and very miserable. 3.5 billion Isn’t that a lot? That’s how costly it was to clean up sandy. Further on, this impacted New York, because 3.5 billion is a lot of money, perhaps they could have been more prepared for sandy. If they didn’t spend so much they could have put this money to better use like; fixing highways, they clean up the city, better transits, donate some of the money, and build nice parks that are safe.
The United States government is known for its laissez faire approach to business. However, at times the government must intervene and take control of prices. When this happens, it is said that a ceiling or floor price has been put into effect (according to the price change restrictions).
Another key cause to the price inflation issue is the extended period of bitterly cold weather that loomed in the northern and midwestern parts of the U.S. throughout the winter months. This led to an “increased demand in home heating oil, which is widely used in the region and is virtually identical to diesel fuel” (Lang1). This increased demand for fuel coupled with the restrictions on exported oil allowed OPEC to jack up their prices an exorbitant amount in a relatively short period of time.
Price discrimination is a significant and influential practice on the market in the modern economic world. It aids in a firm's profit maximization scheme, it allows certain consumers with more scarce resources the opportunity to purchase goods or services that would otherwise be usable, and it aids firms in balancing what is and what is not sold. Price discrimination is an effective means by which a firm can sell a higher quantity of goods, make a higher profit margin on the goods it sells, and builds a broader consumer base due to differing price elasticity of demand for given goods and services. Price discrimination ultimately equalizes price and value for both the consumer and the firm, creating a more ideal situation for both entities in terms of preference and opportunity cost.
Stores during natural disasters have to raise the price of goods, so they can keep supplies coming in for the people who need it. But when stores get their prices way up there it sometimes gets hard for people with less money to buy the necessities. Some people have good reasons to charge the crazy prices that are of price gouging. For starters, they could only have enough to get them by, and so they decided that they would buy something that someone needed and take it to the people for more money than they paid for it. It’s one thing to price gouge because you actually need the money, but it is a complete other to price gouge just because you want some extra money.
Sheffet, Mary Jane. "The Supreme Court And Predatory Pricing." Journal Of Public Policy & Marketing 13.1 (1994): 163-167. Business Source Complete. Web. 15 Apr. 2014.
As with all markets and their respective economies, having equilibrium is one of the key factors of a successful system. Although most markets do not reach equilibrium, they attempt at getting close. There are numerous methods devised to reach equilibrium, whether they involve human intervention directly or a cumulative decision by all factors involved. These factors may be a seller's willingness to lower overall revenue, or a buyer's willingness to withhold some demand for a certain product. Of course, the basics of supply and demand retrospectively control the equilibrium in the market.
In analysis of market failure, a distinction should be drawn between partial and complete market failures. While the later implies a functional market with ineffective function the former describes a complete non-functional market with inability to supply the market with required goods o...
NO MATTER THE DECREES AGAINST YOU… The being with the report against me said, “these were the things written to be executed against this man.” And there were concerting voices urging that the evils be carried out. Obviously the evil decrees were not by God. The devil was responsible.
Generally, the price of a commodity shoots up when its demand exceeds supply and when the reverse occurs. | | Since markets are governed by the law of supply and demand, the market itself will decide the price of goods and services, and this information will be made available to all participants.... ... middle of paper ... ... Merchants will often complain of tax rates being too high for the services provided.