Suppose that a hurricane shuts down much of the power grid in the coastal region of North Carolina and causes flooding and transportation issues after a late August hurricane.

a) What does this do to the demand and the supply of generators during and immediately after the hurricane?

b) What happens to the price and quantity of generators sold in the immediate aftermath of the hurricane if there are no anti-gouging laws? Will there be a surplus or a shortage?

c) What happens if anti-gouging laws place a binding price ceiling on generator prices.

d) Under which of the conditions (in (b) and (c) above would there be a deadweight loss? As part of your answer explain what deadweight loss is.

Answer rating: 100% (QA)

Hurricanes Impact on Generator Market in North Carolina a Demand and Supply Demand Increases dramati... View the full answer