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Raising prices economizes scarce resources. It ensures that one family doesn't buy all the water in the store for themselves, and that there is more for others.
by beaner 9y ago
Raising prices economizes scarce resources. It ensures that one family doesn't buy all the water in the store for themselves, and that there is more for others. If it's an emergency then the high price is worth it. If the price is too high to be bought, the seller can't sell anything. The price finds an equilibrium which is useful, not harmful. If you want to help, send the victims money afterwards.
- frgtpsswrdlame 9y ago>If the price is too high to be bought, the seller can't sell anything. This is the trick in your sentence. We're talking about aggregate demand and aggregate supply but at the individual level there is certainly the possibility that the price is too high for someone to buy. Here's the problem, economic utility cannot be a moral guide in this situation, look at this example: (1) Water is normal price but with a limit per customer or lottery. (2) Water is very expensive and the richest person or people in town buy a lot and hoard it. #2 generates a lot more economic utility, but we can all agree that it's not an optimal situation here.
- shepardrtc 9y agoIt also ensures that poor people can't afford it. For many, even normal prices can be difficult to afford.