Electronics Store

Question 1

Q1\

You are the manager of Local Electronics Shop (LES), a small brick and mortar retail camera and electronics store. One of your employees proposed a new online strategy whereby LES lists its products at PriceSearch.com – a price comparison website that allows consumers to view the prices of dozens of retailers selling the same items. Would you expect this strategy to enable LES to achieve sustainable economic profits? Explain

Q2\

Florida, like several other states, has passed a law that prohibits “price gouging” immediately before, during, or after the declaration of a state of emergency. Price gouging is defined as “selling necessary commodities such as food, gas, ice, oil, and lumber at a price that grossly exceeds the average selling price for the 30 days prior to the emergency.” Many consumers attempt to stock up on emergency supplies, such as bottled water, immediately before and after a hurricane or other natural disaster hits the area. Also, many shipments to retailers are interrupted during a natural disaster. Assuming that the law is strictly enforced, what are the economic effects of a price gouging statute? Explain carefully. 

Question 2

Q\ Florida, like several other states, has passed a law that prohibits “price gouging” immediately before, during, or after the declaration of a state of emergency. Price gouging is defined as “selling necessary commodities such as food, gas, ice, oil, and lumber at a price that grossly exceeds the average selling price for the 30 days prior to the emergency.” Many consumers attempt to stock up on emergency supplies, such as bottled water, immediately before and after a hurricane or other natural disaster hits the area. Also, many shipments to retailers are interrupted during a natural disaster. Assuming that the law is strictly enforced, what are the economic effects of a price gouging statute? Explain carefully.