Microeconomics Assignment
DISCUSSION Forum
Note: The video has Closed Captioning. To activate it, start the video, mouse over the bottom of the video and click on the CC icon, then select from the menu.
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?"
https://edition.cnn.com/2004/LAW/08/17/charley.gouging.charges/index.html
https://www.econlib.org/library/Columns/y2007/Mungergouging.html
2) Read the article from chapter 4 in your textbook: "In the News: Price Increases after Disasters" (pages 84-85) - (Week 1). Also read the article The Problem with Price Gouging Laws.
3) Watch the Price Gouging video above and the second price gouging video (Video 8) under the YouTube link under the Week 1 menu. (Video 9 is about price ceilings in the apartment rental market, you may wish to watch this for additional background on price ceiling impacts.)
4) 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.
5) What is your conclusion? Is price gouging a good thing or not? Or is it just necessary? Explain why.
6) Post your views to the discussion board and refer to at least two different concepts from this week's Chapters. Your illustration of concepts MUST include an explanation why you think they are are relevant to the week's topic using specific information from the articles, videos and other research that you have done.
MAKE SURE THAT YOU ADD SOMETHING NEW to the discussion.
7) Post on three different days for a minimum of three posts. Failure to meet these minimum posting requirements results in point loss.
• Include a word count on each post. All of your posts should sum to a minimum of 500 words.
• Each post submitted should be between 150 and 250 words. Keep them short, specific, and clear.
• Use paragraphs as appropriate.
• Very lengthy posts do not provide an incentive to be read.
• Remember to document all use of sources by using citations and references.These should be in APA format.
• Please review Plagiarism Powerpoints (PLAGIARISM.ppt) and be sure to provide references (APA.ppt), including URLs where appropriate, to all works that you cite.
PEER RESPONSES
Price Gouging
After viewing the video pertaining to the generators that were attempted to be distributed through price gouging, my view of the scenario is that price gouging is an attempt for personal benefit during a natural disaster and only done so for the sellers benefit. A victim of a natural disaster is a victim and should not have to spend what they do not have in a time of need. A natural disaster is not for someone that is not a victim to benefit and take excess money from those that have lost. Graph "A" and graph "C" would be used in a hurricane scenario of price gouging. All necessary items such as gas, water, non-perishable food, and generators would fall into that graph.
"Price Increases after Disaster", was very interesting to read, due to the first hand knowledge in my community that range from the very poor, to the very wealthy. As it states, "allowing prices to rise at times of extreme demand discourages overconsumption" (Mankiw, N.G. pp. 84-85). Price gouging also, "put the budgets of the poor under additional stress" (Mankiw, N.G. pp 84-85). Having that statement in mind clearly proves that price gouging at the time of disaster immediately has negative affects. If it is said that price gouging is a benefit to the economy, how many people will it negatively affect until its a benefit?
The article pertaining to price gouging laws has a section that states "Ethics of Price Gouging". If there is such a statement, there is nothing positive about the concept that is practiced during a natural disaster.
Mankiw, N.G., (2015), Principles of Economics, 12th Edition, Cengage Learning
Word count 298
Discussion 1
According to "Regulation of Trade Commerce, Investments, and Solicitation Chapter 501 Consumer Protection, Upon a declaration of a state of emergency by Governor, it is unlawful and a violation of s. 501.204 for a person or her/his agent or employee to rent or sell or offer at an unconscionable price within the area for which the state of emergency is declared, any essential commodity including, but not limited to, supplies, services, provisions, or equipment that is necessary for consumption or use as a direct result of the emergency. This prohibition is effective not to exceed 60 days under the initially declared state of emergency as defined in s. 252.36(2) and shall be renewed by state in any subsequent renewals of the declared state of emergency by the Governor."
In my opinion and the provided law above, price gouging is unfair and unlawful. Price gouging should be prohibited and people should not be taken an advantage of other people.
In chapter 4, The article: " Price Increase after Disasters" pages (84-85) indicates that price gouging should be welcomed, however, I disagree with the article because we as a people should not take the advantage of another and we should come together as a community/state to rebuild what our community/state.
The associated graphs; Graph A and D because both supply increases while the price increases.
References: Mankiw, N.G., (2015), Principles of Economics, 12th edition by N. Gregory Mankiw, Cengage Southwestern;
www.cnn.com/2004/LAW/08/17/charley.gouging.charges/index.html
word count: 241
Using your own words, please submit a summary emphasizing the meaning of each chapter assigned. Your summary cannot contain less than 250 words.