The combination of low income elasticity of demand for food and high agricultural productivity leads to the demand for food increasing and the supply of food increasing even more,which has lead to rising prices of food.

Question

Quizplus · Accepted Answer

The statement is incorrect. Low income elasticity of demand for food means that a change in income has a relatively small impact on the amount of food people buy, and high agricultural productivity leads to more supply of food. These two factors would lead to a decrease in food prices, not an increase. The rising prices of food could be due to other factors such as increased demand from growing populations or decreased supply due to weather conditions.

The Combination of Low Income Elasticity of Demand for Food