Reading 1/1:
Wasted time has real costs. In 1980 a regulatory quirk forced a handful of California Chevron stations to sell gasoline at below-market prices. Long lines formed, consumers purchased more gas than they otherwise would have, and stations had to ration supplies.
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Most of the consumers taking advantage of artificially low prices would have been better off doing just about anything else. In a 1985 study, economists Robert Deacon and Ron Sonstelie concluded that those who waited in line for 15 minutes saved only about $2-less than the average employee would have earned in a quarter-hour at the time.
History proves that artificially low prices reduce supply. too. As New Year's revelers in New York City welcomed 2015, Uber's surge-pricing algorithm stopped working for nearly 30 minutes.Without the guarantee of extra pay, drivers had little incentive to brave New Year's traffic. Requests spiked 300%, wait times doubled, and the rate of completed trips fell 80%. People who
really needed Ubers-and would have been willing to pay surge pricing-couldn't get a ride.
A similar situation unfolded in Florida last month when JetBlue, Delta and American voluntarily restrained ticket prices on flights out of Florida before the hurricane. By dropping prices during the evacuation, the airlines ensured that flights filled up more quickly, making it harder for many to escape. Some evacuees no doubt booked multiple low-cost flights after prices dropped as a hedge against cancellation. Paying a premium for airline tickets is unpleasant, but letting seats go to waste during an evacuation is tragic.
Next Question
Price increases are an important means of encouraging as many people as possible to cope as well and as creatively as possible with natural disasters. True, the rising price of goods like gasoline can create problems for consumers, particularly the poor. But these drawbacks are negligible compared to the life-threatening shortages that can result when ill-informed public outrage keeps prices artificially low. Even a poor person is better off being able to buy a bottle of water for $10 when the alternative is to have $10 and go thirsty.
Next Reading
1
Sen. Senator = A government leader, a politician. America has 100 Senators.
Gasoline = petrol
1) 'Price Gouging' after a disaster is good because
It motivates people to adapt, ensures the allocation of resources, and stabilizes supplies and prices.
ABCD A.
It upsets the balance between demand and supply.It creates problems for the poor during a disaster.
It proves that Senators' policies reinvigorate the economy.
2) The word "surge" in paragraph 2 probably means
A. descend
Sink
Rocket D. Crawl
