Mississippi cracked down on gougers after Hurricane Katrina. John Shepperson was one of the “gougers” authorities arrested. Shepperson lives in Kentucky and he watched news reports about Katrina and learned that people desperately needed things. Shepperson thought he could help and make some money, too, so he bought 19 generators. He rented a U-Haul and drove 600 miles to an area of Mississippi that was left without power. He offered to sell his generators for twice what he had paid for them, and people were eager to buy. Police confiscated his generators, though, and Shepperson was jailed for four days for price-gouging.

a. Explain how the invisible hand (Shepperson) actually reduced deadweight loss in the market for generators following Katrina.

b. Evaluate the “fairness” of Shepperson’s actions.