Ch. 6 Reflection

How does this relate to the theories from the chapter? The Venezuelan government tried to put price ceilings in place on staple foods and those price ceilings were binding. Since there was no profit to be made by the local farmers of these products, the farmers stopped growing as much of theses products. Because of this, perhaps some hording (including sales of these goods on the black market) and a bad harvest season due to weather, there became a shortage of these staple goods in the market. Because of this, the government was forced to import certain goods that would normally be supplied locally, and shortages continued.
Now consider a different case.  After Hurricane Katrina speculators brought in bottled water but charged quite a lot for it.  What might have happened had price controls been imposed?  Where does the concept of fairness fit into this theory? If similar price controls (ceilings) had been put in place on bottled water post Katrina, it is hard to say exactly what would have happened. In order to better know what would have happened, we would need to know what price ceilings would have been put in place and if those would have been binding. Assuming they were binding, and assuming the price ceilings were kept to levels that the equilibrium price of those goods were at before the hurricane, then we can assume that producers and distributors of bottled water would have continued to keep stores stocked with water and would have made a good profit due to increased demand. However, we can also assume that a similar type of hoarding would have taken place as did in Venezuela. Because of this shortage may have occurred. The concept of fairness fits into this theory in the form of price ceilings on bottled water. It maintains that all people would have equal opportunity to continue buying bottled water at affordable prices. However, those with more money would buy extra, and potentially sell it on the black market for a premium after the stores experienced shortages. Would hefty penalties and fines on selling black market goods keep this issue from spiraling out of control? Would there be a way for the police to spend more effort enforcing the sale of goods on the black market during these types of emergencies?
 How is are the two disaster situations different?  Will supply, and demand be affected in the same way? Why or why not? The main difference is that one situation is temporary caused by a hurricane. Another situation is systemic and could continue into the foreseeable future which could cause even more hoarding. As well as give time for the farmers and producers to change their habits and affect supply. Supply and demand reacts differently in the short term than the long term. Timeline is always an important factor to consider when imposing these sorts of price controls.
Last, choose an article about increases in the minimum wage and comment on it using the theories from this chapter in your comments. The article that I picked disuses the increase of the minimum wage in the City of Seattle to $15/ hour that went into effect on April 1, 2015 but gives employers anywhere from 3-7 years to comply with the new ordinance. I believe the city is taking into account a lot of important factors by creating such a diverse schedule of increases required by employers of different sizes that offer different benefits to their employees. I believe the implementation of this schedule with help all companies transition to the new minimum wage with more ease and grace than if the implementation was strict and immediate. In some cases, this wage increase is binding, but because of the schedule, it is much less binding than if the increase were to be effective immediately. 
Works Cited
$15 Minimum Wage. (n.d.). Retrieved February 16, 2019, from http://murray.seattle.gov/minimumwage/

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