The Economic Way of Thinking 13th Edition by David Prychitko, Peter Boettke, Paul Heyne

Exercise 7

A severe hurricane passing through a populated area will blow out a lot of windows and thereby cause a huge increase in demand for the services of window makers. If window makers respond by raising their hourly rates, the cost to homeowners of having their windows repaired will rise. But does a hurricane raise the cost to window makers of repairing windows? Or are window makers who raise their rates merely taking unfair advantage of the situation? The following questions might help you think the issue through.
( a) Why are window makers able to raise their prices?
( b) Who is likely to put the most pressure on window makers to raise their prices?
(c) In what ways will window makers experience rising marginal opportunity costs?
(d) Why might window makers be reluctant to raise their prices?
(e) What might a window maker do to raise prices without angering people in the community?
(f) In what ways will rising prices make more window maker services available to people in the community?