The video has Closed Captioning. To activate… The video has Closed Captioning. To activate it, start the video, mouse over the bottom of the video and click on the CC icon, then select from the menu. Price gouging occurs only under a narrow set of legally defined circumstances. Price gouging is a legal concept, not an economic concept.When a natural disaster occurs and the governor of the state declares a state of emergency then the price gouging law of that state will go into effect, but only if the state has such a law.The economic effect of price gouging laws is to put a Price Ceiling on all goods and services covered by the state’s price gouging law. Price ceilings always cause shortages.