A key factor underlying the instability of primary product prices and export receipts of developing nations is the
A) low price elasticity of the demand of primary products.
B) high price elasticity of the supply of primary products.
C) high price elasticity of the demand of primary products.
D) high price elasticity of the demand and supply of primary products.

Question

Quizplus · Accepted Answer

The low price elasticity of demand for primary products means that a change in the quantity available on the market (either an increase or decrease) does not significantly affect the demand or the price at which these products are sold. This characteristic contributes to the instability of prices and export receipts for developing nations that rely heavily on these products, as small changes in supply can lead to large fluctuations in prices.

A Key Factor Underlying the Instability of Primary Product Prices