Shortages of resources such as water food and building, Business Economics

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Shortages of resources such as water food and building

Economic Efficiency

Shortages of resources such as water, food, and building supplies are a problem many communities face after a natural disaster occurs. Some communities have even enacted laws to prevent “price gouging,” the practice of asking very high prices for products in short supply after a natural disaster.

Discuss how “price gouging” might lead to Pareto improvements.

Is legislation preventing price gouging fair? Is it a good idea?

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