The prices of certain goods, such as ice and gasoline, often increase after a natural disaster such as a hurricane. The economic explanation for this observation is that
A) people panic in disaster situations.
B) disasters bring out the worst in people.
C) the disaster temporarily reduces the supply of the goods and increases the demand for the goods.
D) the disaster temporarily reduces the supply of the goods and reduces the demand for the goods.

Question

Quizplus · Accepted Answer

Natural disasters often disrupt the supply chain and distribution networks leading to the temporary reduction in supply of certain goods. Additionally, the demand for these goods often increases as people stock up or evacuate, leading to an increase in prices due to the basic economic principle of supply and demand. Panic and negative human behavior are not the primary reasons for price increases after natural disasters.

The Prices of Certain Goods, Such as Ice and Gasoline