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Assignment – Economics
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Institution

Assignment – Economics
Using the Demand-Supply framework, explain why the prices of essential goods such as water and milk increase during a natural disaster.
During Natural disaster, it is expected that the essential commodities like milk and water are very scarce since their availability is very minimal and the marginal cost leads to the firms producing less output. Therefore, the supply curve shall shift to the left side. With an increase in marginal cost at the present price, the producers will find that price being lower than the marginal cost.
Price of Water
Quantity of water during drought
Graph 1: A graph of Price of Water against Quantity of water during drought.
What is price gouging? What are some of the recent instances of price gouging in the United States?
The term Price gauging indicates to the situation where a vendor spikes to the values of goods, commodities or amenities to an equal that is much complex than what is well-thought-out fair or rational and is well thought-out potential unscrupulous degree and exploitive. Normally, the process occurs after the supply or demand. For instance, the United States has witnesses necessities price increase after natural disasters like the hurricane. Florida as a criminal offense witnessed law of “state of emergency” where a provider of significant goods services increases abruptly the prices when he beat somebody to it a civil emergency. Like a retailer increa…