00:01
There's this government intervention into the price system known as price gouging laws.
00:06
And essentially what this says is that particular markets and firms are not allowed to increase their prices for goods and services when their demand is significantly increased during a situation such as a natural disaster.
00:19
So we could consider some of these goods, these emergency goods and services.
00:23
Some of some examples of these could be things like flashlights, such as if the power goes, out due to a massive storm, people are going to need flashlights.
00:35
We could also think of things like snow shovels as a result of a really big snowstorm.
00:40
People need to shovel their way out.
00:42
Sandbags could be another one in the case of flooding.
00:44
So these are all items that their demand is usually pretty low during most times of the year.
00:49
So maybe we could consider that to be at this equilibrium point.
00:53
We have our p star and our q star at most times of the year.
00:56
However, suppose a natural disaster hits and all of a sudden the demand for these items increases pretty dramatically.
01:03
So our demand curve is going to shift upward and outward.
01:07
And this would occur during a natural disaster when suppose people really do need these emergency services.
01:12
So as this demand curve shifts outward, we see that our equilibrium is going to change.
01:17
And as a result of that change, not only is our quantity demanded going to increase, but our price also increases as well by quite a lot.
01:27
So here's our new price as a result...