Keiser University Price Gouging Discussion and Responses

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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 poinSummarize 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.pptxWhat is your conclusion? Is price gouging a good thing or not? Or is it just necessary? Explain why.
   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
6. .Respond to two peers
7. peers1
8. The article, “Florida lawsuits allege price gouging,” posted on the CNN website talks about lawsuits that were filed against two hotels, one being in Lakeland and the other being in West Palm Beach. The reasoning behind these lawsuits was an unfair practice of price-gouging during times of crisis after hurricane “Charley” hit and many were left with no choice but to leave their homes. (Phillips, 2013). The Lakeland hotel advertised $45 a night but several people who had reservations were told that there was no vacancy and a lady ended up having to pay $61.27 for her room. As for the West Palm Beach hotel, they advertised rooms for less than $50 a night but the hotel charged double of that to three customers. (Phillips, 2013). I would say that Graph A and Graph D would explain this event since in Graph A explains that consumers are willing to pay extra for a good of high demand and we can also see Graph D come into play where the price for a good increase causing demanders to take less interest. In this case, the price-gouging that took place was completely unfair and unethical. I also believe that if these hotels were going to raise prices, which would still be unfair in times of crisis, they should have advertised the change in price. You can see the concept of law of demand here when hotel prices roses causing consumers to want to purchase a room. Number of buyers is also seen here when the hotels knew many people will want to buy a room so they unfairly raised the prices. Word Count: 274References
9. Peers 2All these articles are related to price gouging, and each of them explains how sellers tried to get an unfair gain from consumers during a natural disaster by significantly increasing prices for essential consumer goods and services. I believe graph A from the supply and demand graphs can be used to explain some these events. For example, graph A can be used to explain the event in the article “Florida Lawsuits Allege Price Gouging. “First, hurricane Charley increased the demand for hotel rooms as people tried to flee; second, as a result, the hotel charged more than double for rooms; and third, consumers who made reservations had difficulty getting their rooms as a higher quantity was sold. In other words, an event that raises the quantity demanded at any given price shifts the demand curve to the right, where both equilibrium and quantity rise. Also, graph A can be used to explain the event in the article “They Clapped: Can Price-Gouging Laws Prohibit Scarcity?” First, the damage of hurricane Fran left the people without power in hot weather, increasing the demand for ice. Second, due to this event, four young men from a nearby town bought a good quantity of ice in their town to resale for a higher price, resulting in a higher quantity sold. Whether price gouging is a good thing or not, it is a controversial topic with many different points of view. For sellers and business owners, increasing the prices of high-demand products or services during an emergency is convenient because it helps them to balance the loss of revenue from the nondemand products. However, from the consumers’ point of view, sellers and business owners are morally obligated to provide customers with equitable access to essential products or services in times of emergency. In my experience, I am the type of person who buys a product for a higher price if I need it and I do not necessarily think price gouging is terrible. After a natural disaster, if the prices are low, we as consumers would buy more products because it is in our nature; if it is at a low price, we will buy as many as we can. However, suppliers will not try to restock their products because they will not be financially motivated to do it.