ABSTRACT
Few propositions are as crucial to orthodox economic analysis as those relating supply and demand for commodities and services to price. The notion that producers and consumers change their behaviour when prices change, and in a predictable direction, is basic to most economic analysis. In almost all modem societies, whether they be relatively free from state control or rigorously socialistic, prices are used to guide the economy into optimum, or supposed optimum, utilisation of scarce resources. It should, therefore, be a matter of serious concern to economists engaged in studying or advising the underdeveloped countries to know whether the inhabitants of these countries do respond to price and income incentives in the expected fashion, whether they are indifferent to price, or whether they respond perversely.
