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 supply of primary products
C) High price elasticity of demand of primary products
D) None of the above

Question

Quizplus · Accepted Answer

Low price elasticity of demand for primary products makes it difficult for developing nations to increase their revenue by increasing exports as demand does not rise proportionately with price. This, in turn, makes primary product prices and export receipts unstable.

A Key Factor Underlying the Instability of Primary Product Prices