Question

Explaining Why does a natural disaster (drought, flood) in an agricultural region almost always result in higher prices for commodities and consumer goods?

Answer 1

Answer and Explanation:

Natural disasters such as these can cause damages to agricultural products Any region experiencing frequent flooding and drought will have a reduction in productivity level. When this happens, the supply of agricultural products in the region will fall and demand will go up. Based on the law of demand and supply, this will result in the prices of commodities going up.

Drought and flood causes loss of livestock, storage problems, transportation issues and a fall in output. An increase in prices is used to cover up for some of these. An increase in input costs also causes price increase.