Economists note that instability of the prices of primary products (tin, coffee, copper) is mainly caused by
A) low price elasticity of demand and low price elasticity of supply.
B) low price elasticity of demand and high price elasticity of supply.
C) high price elasticity of demand and low price elasticity of supply.
D) high price elasticity of demand and high price elasticity of supply.

Question

Quizplus · Accepted Answer

The instability in the prices of primary products like tin, coffee, and copper is primarily due to both low price elasticity of demand and low price elasticity of supply. This means that a small change in supply or demand can lead to significant changes in prices because consumers do not significantly change their quantity demanded with price changes, and producers cannot quickly adjust their quantity supplied.

Economists Note That Instability of the Prices of Primary Products