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Today we talked about price gouging. Here's a section from the article on our website-

Each time a hurricane hits the United States, we are bombarded with reports of something known as "Price gouging." What is this common phenomenon? Those who put little thought into economics, and more thought into emotions, will say that price gouging is the raising of prices on necessities at a time when people need them the most. Most often it is at a time when people are buying things they cannot live without in the event of a major disaster.

Take this headline from CBS as an example.

"$9 for a $4 case of water: Florida hit by price gouging ahead of Hurricane Dorian"

Let me first say that I understand the emotional reaction to this. It can, on the outside, look as if sellers are "taking advantage" of people in need, at a time when they have no choice but to the buy the products at whatever price they are available. In fact, it might be true that some individual business owners are taking advantage of the ability to reap higher prices than normal on basic necessities. My emphasis, however, is going to be placed on the economic implications of these actions, and the end result they produce. Back to that original headline; "$9 for a $4 case of water: Florida hit by price gouging ahead of Hurricane Dorian." What does it mean for a case of water to be worth $4? Most of us put little time into researching all of the expenses that go into the material cost of the case of water. In addition, we put little effort into finding out why that case has been deemed "worth" $4. The actual cost of the case to the store owner might have been $2.50. Why then, is it worth $4? It's a very simple answer: That's what people will pay for it. We put little thought into the fact that everything we use on a daily basis has been priced in a society-wide auction. You know how an auction works. The auctioneer holds up a product, and the public increases the price they are willing to pay for that product, until the top price is reached. It might not be obvious, but that same process has been used in every product we use on a daily basis. It hasn't happened on an individual level, but it has in fact happened. A product is being offered, and the seller has soug --- Support this podcast: https://anchor.fm/goodmorningliberty/support

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The Inconvenient Truth | Supply & Demand Applies to All Situations - Even Natural Disasters 01:01:44 Share

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Shownotes Transcript

The Inconvenient Truth | Supply & Demand Applies to All Situations - Even Natural Disasters