Question

How would you explain to someone the difference between (1) “normal” price increases based on supply and demand and (2) price gouging? Write a paragraph explaining how and provide an example.

Answer 1

Explanation:

: The price P of a product is determined by a balance between production at each price (supply S ) and the desires of those with purchasing power at each price (demand D ). The diagram shows a positive shift in demand from D1 to D2 , resulting in an increase in price ( P ) and quantity sold ( Q ) of the product.

Answer 2

Explanation:

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