Assignment Essay Example | Topics and Well Written Essays - 250 words - 43

Assignment - Essay Example ticular good such as generators spikes up after natural disasters such as hurricane, its price will naturally go up because virtually all people would need a generator in the area that lost power due to the hurricane. There will be people who are willing to pay for premium prices just to get the generator and in effect, that will raise the prices. Without government intervention during state of emergency, the dynamics of the market will take over. For example, if the supply of generator is 100 and the demand suddenly increased to 1000, its typical price of let say $100 will shot up to even a thousand because the demand curve increased without increasing the supply curve. When the government intervenes however the market will be distorted because it is forcing the price to remain at its previous level even if the demand curve is increased. But this is not necessarily bad because the demand is also temporary. Eventually, when normalcy returns to a disaster struck area so will the price because the excessive demand will be