Managerial & Administrative - the Effects of Price Gouging

Kimberly Stanley

Dr. Turner

Economics-301

16 Dec 2010

The effects of price gouging

Under certain circumstances precautions are taken and decisions have to be quickly made. Price gouging is when random crucial events occur and prices began to rise in advantage of more sales. A change in the weather such as, bad storms, hurricanes, terrorist attacks, or any aspects of a crisis is when this occurs. Many merchants start to raise prices to gain more funds and use this to profit sales. Jim Cox: "The Precise guide to economics" Prices began to increase during the prime time of hardships causing extreme effects on many families. Seemingly to take advantage of many individuals during the time of despair.

During hurricane Katrina price gouging was something highly performed. Especially for services such as gasoline and ice. These were items that were highly needed. In some states the gouging laws prohibits to exceed the prices of goods charged at the original price right before an emergency. Consumers know and realize that the customers whom buy the product need and value it the most. This reflects the state of greed and not having any kind of remorse during these drastic and hardships. Some critics argue there is a positive side of price gouging. Gouging can contribute in little ways to shortages that come about. Price gouging keeps consumers open minded and prepared. It keeps shelves in department stores stocked and prepared for when storms or hurricanes do arrive. Price gouging could also be a solution to a more better profit for sales. We as individuals know that the time may come that we would need to buy these supplies, therefore before we know that price gouging will arrive this could trigger some to go ahead and purchase the items.

In addition, under all reality the good side of price gouging does not benefit or overweigh the bad. Price gouging has been said that companies are profiting at the customer expense. Who is it that really gets to make the decision when gouging has just risen too much. The odds are that this could be taken over our means and out of control. When is enough going to be enough? These