Consumers expressed outrage at the high price of chainsaws after Hurricane Andrew hit Florida and Louisiana, with newspaper editorials accusing suppliers of unconscionable price gouging. Use a supply and demand graph to assist in explaining the increase in the price of chain saws after Hurricane Andrew

An increase in the number of downed trees led to an increase in the demand for chain saws. When demand increases and supply is unchanged, equilibrium price and quantity increase (Figure 4-24). "Gouging" may be nothing more than a higher equilibrium price due to an increase in demand.



Figure 4-24