Read this article; what is the most likely way that anti-gouging laws potentially can increase social welfare?
Select one:
a. They increase the deadweight loss for those companies who practice price gouging. The laws raise these companies' costs so that it is no longer profitable for the companies to set price according to MR = MC.
b. Penalties assessed on price gougers can be redistributed to victims or the area at large that was affected by the natural disaster. In that sense, the government wants more illegal price gouging to occur so it can prosecute and raise more revenue in fines and redistribute to voters.
c. Legislators and regulators benefit by making pronouncements against price gougers, knowing the public holds such a low opinion of them (the gougers, not the politicians :). The public sees swift action against profiteers, and legislators/regulators enhance their standing in the public eye.
d. They eliminate the deadweight loss associated with monopoly power (and prices) of price gougers. With lower prices, they increase consumer surplus