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One way of summarizing Breslow’s article is “The Law of Demand guarantees that there will sometimes...

One way of summarizing Breslow’s article is “The Law of Demand guarantees that there will sometimes be price-gauging.” Explain what this means. Do you agree with his reasoning? Why or why not?

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Answer #1

Answer - By price gauging it is meant that , there will be the point where the seller will be able to charge the price as per his own wish and then too there will be no effect on demand. Normally this mechanism takes place in case of demand or supply shock. This is called price gauging.

I do not agree with this. Law of demand does not lay down the principle of price gauging. It indicates the inverse relation between the price and quantity demanded. Demand shock or supply shock on which price gauging depends is not included in Law Of Demand. Thus I do not agree with it. Whenever the price will be higher , the demand will decrease and vice a versa.

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