A Quick Question Regarding Y2 Macro [EDEXCEL] Watch
The section is 4.3.2 - Factors Influencing Growth and Development.
The section is taking about commodity prices as a factor, and it says the following:
"One reason why commodity exports may not increasing development is falling commodity prices. The more price inelastic the demand, the greater the fluctuations are to the price. Sudden price changes cause large increases/decreases in revenue for the economy, making it hard for agents to predict revenues in the short and long term."
Why would the prices being more inelastic cause there to be great fluctuations? Maybe I'm just missing something obvious.