Question

Question: When price gouging laws prohibit prices from rising in an area after a natural disaster, residents can expect

a. Business and individuals to divert and transport vitally needed goods into the area even when doing so will lead to losses.

b. A rapid inflow of vitally needed goods and services at economical prices.

c. surpluses of vitally needed goods in the near future as people respond to the attractive profit opportunities.

d. Shortage and delays in the future availability of vitally needed goods.

Answer 1

If there are price goughing laws in play, what happens is that the prices will not increase as a result of which when there is a natural disaster the people will prefer to buy more of the goods because they feel that the goods will be over and this is called panic buying as a result of which there can be shortage created and due to the lack of transportation system and excess demand what happens is that there would be shortage of goods and future availability can be b.a. problem where the inflow of goods is less

Therefore (d) is the answer

Surplus is not created and inflow is affected also diversion of goods is not done because they are already selling at the earlier prices only

(a,b,c) is wrong