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Last week our lesson focused on the characteristics of capitalism and socialism. The lesson this week will look at the issue of price gouging.
Assignment is due by Thursday, 4/9/20 at 2:00 pm.
Assignment Part A:
Read the Opinion Letter by Ben Graffam, Lakeland, posted Apr 3, 2020 at 12:02 AM, Lakeland Ledger. Click on the box titled Opinion Letter at top center of post to access.
Define the following two words used in the article:
Assignment Part B:
Watch and take notes on the following two short videos:
Art Carden and Richard Wolff, both economists, disagree as to whether, in the midst of crisis, sellers will hold back supply in order to keep prices high or ship in more supply in order to take advantage of higher prices. Both agree that increasing supply will drive prices down.
3. Is a selfish seller likely to hold back supply if his competitors are working hard to increase supply?
4. If all competitors were holding back supply, could a selfish store owner make more money by holding back his supply or by shipping in more needed items?
5. How could an agreement between store owners affect the results of price gouging?
Assignment Part C:
Florida has laws against price gouging. Read the information below from Attorney General Ashley Moody at http://www.myfloridalegal.com/#.
What is Price Gouging?
Florida Statute 501.160 states that during a state of emergency, it is unlawful to sell, lease, offer to sell, or offer for lease essential commodities, dwelling units, or self-storage facilities for an amount that grossly exceeds the average price for that commodity during the 30 days before the declaration of the state of emergency, unless the seller can justify the price by showing increases in its prices or market trends. Examples of necessary commodities are food, ice, gas, and lumber.
How do I know if I’m being price gouged?
The law compares the reported price of the commodity or service during the state of emergency to the average price charged over the 30-day period prior to the declared state of emergency. If there is a “gross disparity” between the prior price and the current charge, it is considered price gouging.
The videos that you watched in Assignment Part B mentioned essential commodities or items such as water, gas, flashlights, generators, and plywood that have the potential for price gouging during/after a hurricane.
Imagine that you are a small business owner who normally sells a case of bottled water (24 x 16.9 oz) for the price of $4.79.
2. At what price do you think that you could legally sell the case of water after a hurricane?
3. What price do you think would be a “gross disparity” and thus price gouging based on Florida Statute 501.160?
4. Make a list of 7-10 commodities or items that are scarce and have the potential for price gouging in our current coronavirus pandemic.