Question

Following natural disasters (like tornados or hurricanes), hotels often “jack up” room rates, and stores increase the price of bottled water. Critics of this practice claim that it exploits vulnerable people in their time of need. Using supply and demand analysis, explain why the seemingly inhumane practice of increasing the price of such essentials following natural disasters might be “more humane” than requiring prices to remain stable. (Note: This is not a long essay question, but a “full credit” answer probably requires several sentences – NOT five words).

Answer 1