Economics · International Trade
According to the Prebisch-Singer hypothesis, the long-term secular terms of trade of developing nations have historically been unfavorable because when incomes in developed countries rise, their demand for primary commodity exports declines. Why does this occur?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The income elasticity of demand for primary goods is relatively low.✓
- 2The income elasticity of demand for primary goods is exactly zero.
- 3The income elasticity of demand for primary goods is highly elastic.
- 4The price elasticity of demand for primary goods is perfectly elastic.
Correct answer
The income elasticity of demand for primary goods is relatively low.
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