Question

why does a natural disaster such as a drought or flood in an agricultural regional almost always result in higher prices for commodities and consumer goods

Answer 1

Ans) In the region witnessing frequent flood and drought, productivity decreases which results in less supply and more demand. Following the law of demand and supply, the prices of commodities increase.

Due to drought and flood there are several damages like livestock loss, hit in irrigation system, disturbance in storage, processing and transportation, decline in output etc. which causes huge economic loss and to cover the gap, prices of commodities are increased.

Another reason for it could be increased input cost, due to occurrence of flood, many properties get destroyed which are needed to be built again and again. This also causes the price to soar.

Next the areas hit by natural disaster see loss of infrastructure which makes the mobility of goods hard resulting in increased prices.