The feature states that in New Jersey, a law against price gouging prohibits price increases of more

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The feature states that in New Jersey, a law against price gouging prohibits price increases of more than 10 percent in an emergency situation. Assume that prior to Sandy the equilibrium price for portable generators was $100 and the equilibrium quantity was 200 units per month. After Sandy, demand increased to 500 units per month and generator sellers raised prices to the maximum amount allowed by law. Do you think that the new higher price will be high enough to meet the increased demand? Use a supply and demand graph to explain your answer.

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Principles of Macroeconomics

ISBN: 978-0134078809

12th edition

Authors: Karl E. Case, Ray C. Fair, Sharon E. Oster

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