Evaluate using the economic analysis of Supply and Demand, price controls and/or the pricing and incentive...

Evaluate using the economic analysis of Supply and Demand, price controls and/or the pricing and incentive systems.

Do We need more or less anti-price gouging laws? Why?

Expert Solution

We need more ANTI PRICE GAUGING LAWS.

Anti price gauging laws are the laws formulated in order to avoid the sellers from spiking up the prices of the commodities to such a high level such as they become out of the purchasing power of the consumer.

EFFECT ON SUPPLY- As a result of price gauging the prices of the commodities rise to a great extent and hence as er the law of supply the quantity of supply increases with the increase in the price of the product and the seller increases the supply so as to earn more by supplying higher quantities at higher prices.

EFFECT ON DEMAND- As per the law of demand the quantity of the commodity demanded by the consumer decreases due to the increase in the prices . Hence in case of price gauging the demand will increase.

SOLUTION- Price ceiling should be done so that the prices could be extended only upto a certain level. The demand and the supply will be then adjusted by the consumer in such a way that the market equilibrium can be maintained and the consumer does not feel exploited.

Rahul Sunny answered 2 years ago

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