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The key issue here is inelastic demand.

The key issue here is inelastic demand. When demand is inelastic, an increase in price tends to yield proportionally small decreases in the quantity demanded; while a decrease in price yields proportionally small increases in the quantity demanded.

As an example, consider the overall market for food. We all have to eat, so even if the price for food were to rise, chances are that as long as we can afford it, we would not reduce our overall food consumption all that much. On the other hand, when food becomes cheaper, we may not buy all that much more overall either. In truth, in the US today, more people are concerned with keeping their weight in check than with making sure that they have enough calories.

The implications of the inelastic nature of the overall demand for food has had a profound impact on farming in the US and around the world. As farming becomes more and more productive, with each worker in agriculture yielding more and more output, the need for agricultural labor has fallen dramatically. At the beginning of the 20th century almost two out of every five working Americans worked in agriculture. Today this number has fallen to less than one in fifty. At the same time, the total value of agricultural production represents an ever smaller portion of the total value of goods produced in the American economy. The reason is that as farming has become ever more efficient.

On the other hand, during famines, the price of food tends to rise astronomically, as everyone scrambles to feed themselves and their families.

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