This week's discussion topic is about Price Gouging. Price gouging occurs only under a narrow set of legally defined circumstances. Price gouging is a legal concept, not an economic concept.

When a natural disaster occurs and the governor of the state declares a state of emergency then the price gouging law of that state will go into effect, but only if the state has such a law.

The economic effect of price gouging laws is to put a Price Ceiling on all goods and services covered by the state's price gouging law. Price ceilings always cause shortages.

What is your conclusion? Is price gouging a good thing or not? Or is it just necessary? Explain why.