No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Chapter Five: Supply & Demand: Markets at Work 123 an alternative solution provide correct incentives to encourage socially optimal behavior in consideration of the natural disaster? 8. You are now the governor of South Carolina, and a major hurricane has just devastated your state. If you want your state to recover as soon as possible, should you make enforcement of anti-gouging laws a priority, or should you suspend them due to the emergency? Assess the pros and cons of both choices. 9. True or False. Once a company introduces a new product, there will be an initial period of “guessing” the right price in order to balance consumer demand as well as the opportunity cost of production resources; but once an equilibrium price is reached, that price can be expected to stay there since equilibrium is defined as the “steady-state.” Why or why not?