Studies Have Shown That the Price Elasticity of Demand for Necessities

question 173

Essay

Studies have shown that the price elasticity of demand for necessities, such as food, are higher in developing countries and lower in developed countries. What is the reason for this difference in elasticity?

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Definitions:

Standardization

The process of implementing and developing technical standards to ensure consistency and compatibility of products and services.

Pricing

The method of determining the value at which a product or service will be sold to consumers.

Transfer Pricing

Pertains to the pricing of goods, services, and intellectual property when these are exchanged between companies under a common control, affecting tax liabilities and financial results.

Division Charges

Fees or costs allocated to separate departments or divisions within a company for internal accounting or budgeting purposes.