Economic Analysis of Business Practice
The average adult has a first or second grade level of economic understanding. And so, we prosecute the people who truly help and pat ourselves on the back for donating old socks, winter coats, and decor pillows to hurricane victims.
I don’t think it is possible to say anything for certain, so that’s why we need to be very careful with how we handle all this situation. I do Forex trading with support of OctaFX broker, it’s one of the finest brokerage companies of all-time and leads into pretty solid results, I get daily market updates for all major currencies, commodities, indices and much more while it’s all given free of any cost, so that’s why it is so good and useful.
Price gouging runs rampant in the world, it’s unavoidable. The latest toys or sneakers sell out in seconds, only to be available minutes later on e-bay at a ridiculously inflated price. We sometimes pay way too much for a concert ticket or sporting event, but sometimes we are that desperate to be there. We may grumble about it, but we still pay the piper to get these harmless items. For me gouging becomes an issue when people need help. I say this confidently after playing a role in the recovery efforts for Hurricane Irene and Super Storm Sandy. The gouging I personally witnessed was downright criminal at times. I agree that most adults have a low level understanding of basic economics. The price gouging offender in this video was not analyzing his potential to create wealth by moving his assets from lower to higher valued uses. He was not trying to help people either. He was simply trying to exploit people in need and he knew it. This was not a person trying to cover any of the costs associated with buying and transporting the assets; he was trying to make a big payday off those in need. This is not the same as the kid who waits on line for two days to buy the latest sneakers so he can sell them on e-bay. To me that kid has basic business plan!JG
When viewing the video, I thought really hard about price gouging and the statement by John Stossel when he said “who decides what price is too much”. The truth is that even though an item may be a necessity, is it immoral to charge an astronomical amount for it? I say maybe, but a business has to do what it can to exploit its competitive advantage for the viability of their company, and the satisfaction of their shareholders (if publicly traded). As the one economist said “Love is not going to motivate people to help others”, it is the bottom line or profit involved that motivates. A recent example is the outrage that has been shown towards Martin Shkreli, who is the founder and CEO of Turing which is a pharmaceutical company that makes a drug to treat toxoplasmosis. Turing stated that they “needed to make the drug profitable and planned to use the profits to make a newer, better drug.” (Kempner, 2015) Is this price gouging? I guess it depends on where you are looking from. I do agree a 5000% price increase is extreme, but keeping true to his business model, Shkreli “grabs an old drug, makes no modification and hikes the price exorbitantly”. It seems that they have identified money-making opportunities and have sought to create great wealth from it. This is capitalism at its best and worst. A product is truly only worth what someone is willing to pay for it, and when it comes to our health is there any price too high?ReferencesKempner, M. (2015, September 29). HIV Drug Price Increase Brings ‘Price Gouging’ to the Forefront. Retrieved from RH Reality Check: http://rhrealitycheck.org/article/2015/09/29/hiv-drug-price-increase-brings-price-gouging-forefront/
Who would have ever thought that price gouging was good. When I watch the video, at first, I thought that it was cruel of companies to price gouging especially when there was a crisis. When I think about it, it makes sense from this to be done. The video showed a store shelf and how things had disappeared because of the demand for something. If the price is higher for a necessary item, people are going to only buy what they need verses buying out the store. As the Business Insider discusses, “people will stop to think just how many slices of bread they plan to eat when a loaf is $7, instead of instinctively grabbing three "just in case” (Price Gouging After A Natural Disaster Could Actually Help People, 2012).Works CitedPrice Gouging After A Natural Disaster Could Actually Help People. (2012, November 14). Retrieved from Business Insider: http://www.businessinsider.com/in-defense-of-price-gouging-2012-11
I definitely wanted to expand on what Craig mentioned in an earlier post. As a future healthcare provider, the price of pharmaceuticals is ridiculous. Raising the price on a drug like Daraprim has gives no benefit to the patient. Maybe Shkreli's public philosophy is that increasing drug prices will somehow give the drug more value, but let’s be real: Martin Shkreli and Turing Pharmaceuticals acquired an old drug, without patent protection, and decided to make a lot of money. Unfortunately, we all understand the truth and it is that money takes priority. Many of these companies don’t truly care about the public or the patient or the people. They only care about their bottom line.http://www.businessinsider.com/why-martin-shkreli-hiked-drug-price-2015-10