Reference no: EM133128178

In the aftermath of the devastating hurricane Sandy in the Northeast and Jersey Shore, prices of certain goods had risen dramatically. Some people had objected to these price increases, and called for the government to forbid sellers from charging such high prices. This exercise asks you to apply economic principles in explaining why prices tend to rise, and what consequences would result from forbidding sellers from raising prices. We will consider the case of bottled fresh water being available for sale in supermarkets.

To submit your response for this particular discussion you need to:

A) draw your graphs on a piece of paper

B) then take a cell phone picture of your work

C) then attach that picture to your Discussion reply or if you cannot do that then aattach the pic to a separate email sent to me with the subject line - email Discussion response for Hurrican Sandy

Any questions of this process let me know.

Students need to answer the below questions for the Discussion - Hurricane Katrina:

1) Draw a graph showing the equilibrium price for the pre-hurricane demand for and supply of bottled water that currently existed in the market place. (label the current equilibrium price as p1 on the price axis, and the quantity as q1 on the quantity axis.

Now suppose that the hurricane hits. One effect is to hinder delivery trucks from bringing as much water as before and the need for additional water supplies, so the supply of and demand for bottled water will be affected.

2) Draw a new supply and demand curve to illustrate this change in supply and demand, and label the new Supply curve S2 and the new Demand curve D2. Label the new equilibrium price as P2.

3) Explain and graph the effect on price and quantity if the government establishes a price ceiling at a price below the new market equilibrium price?