Suppose the New Orleans city council passes a price gouging law: during a hurricane, the price of a generator cannot increase by more than 50% above the normal market equilibrium price. During a hurricane there would be a shortage of generators.

Suppose the New Orleans city council passes a price gouging law: during a hurricane, the price of a generator cannot increase by more than 50% above the normal market equilibrium price. During a hurricane there would be a shortage of generators.

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter16: Externalities, The Environment, And Natural Resources

Section: Chapter Questions

Problem 4DQ

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Question

Price
$1,500
$1,200
$900
$600
$300
$0
Quantity supplied
100
80
60
40
20
0
Normal times
quantity demanded
10
20
30
40
50
60
generators.
Hurricane
quantity demanded
40
80
120
160
200
240
Suppose the New Orleans city council passes a price gouging law: during a hurricane, the price of a generator cannot increase by more
than 50% above the normal market equilibrium price.
During a hurricane there would be a shortage of

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