Question

In the story, Ramon Fernandez initially found it repugnant and unfair that the price of a flashlight at “Big Box” would increase so dramatically after the earthquake; that is, until he met Professor Ruth Lieber.  Apply the basic economic logic of supply and demand analysis to describe and explain the economic benefits of allowing prices to rise, sometimes by a large amount, in the aftermath of a natural disaster, such as an earthquake, hurricane, or tornado.

Answer 1

A natural disaster is a clamity that can not be stopped by humans , we can only anticipate its arrival and in most cases we are left just to analyse and reduce the after math . So when a natural disaster hits any area or causes immense detruction. For example the hurricane Katrina that hit the new Orleans it completely turned the city upside down . People get no time to prepare for anything their houses food money everything goes down the drain. At a time when even clean drinking water turns into a commodity the prices of other essentials hike up exponentially. As a rule nature leaves survivors. People who are left with some commodities at their grocery stores start selling the absolute basic necessities at a much greater price than the usual one because they want to gain the full advantage of the situation. According to the demand supply logic the demand of the things increased ten fold and supply is scarce causing the prices to surge up crazily and people who can still afford it buy it this balancing the market equibrillium .