Question

Wildfires are threatening around California.

            a. What happens to the D for emergency supplies like water and batteries?

            b. What happens to the market for emergency supplies?

c. The government has made it illegal to raise P more than 10% in an emergency.          (Penal Code Section 396.) What happens to the market for emergency supplies?          

d. What are the benefits of this policy?

e. What problems will this policy create?

Answer 1

Ans. a. This would increase the demand for emergency supplies like Water and Batteries.

b. The demand for emergency supply for increase and thus leading to increase in the prices of the emergency supplies.

c. This would lead to more people demanding the emergency supplies and supply might fall short of demand at a point of time.

d. This policy would ensure that no one is deprived of the emergency supplies and everyone gets access to it.

e. This policy would lead to decrease in the supply of emergency supplies because of lack of incentives on the suppliers part.

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