Under normal circumstances, we would expect that most markets are more or less in equilibrium. To predict which prices rose post Hurricane Sandy, all we need to do is look at those businesses facing large shifts in either their demand or supply curves after the storm.

With many people forced out of their homes, hotel rooms became scarce. The hotel industry saw a large outward shift of the demand curve in its market. Unable to quickly increase output levels, higher prices and price gouging were now possible.

Complaints of price gouging were not only lodged against hotel businesses.

Discussion Question: As a consumer, do you feel this is fair? What about from the producers point of view?