The study intended to investigate and examine the existence and the
effect of economy of scale in household food expenditure in Egypt upon
expenditure elasticity among several scales of family sizes. Also, it intended
to examine the difference in the estimated expenditure elasticity for the
specific scale between rural and urban areas. Data from the family Budget
survey of 1999/2000 were used. The per capita total annual expenditure and
per capita expenditure on 10 major food groups were calculated and used for
family size ( one person, 2-3, 4-6 and 7 or more persons).The relatively
importance of economy of scale increased when move from the smallest to
the biggest family size. Expenditure elasticity's were estimated for Grains, Legumes,
Vegetables .Fruits , Meat & Poultry, Fish, Eggs, Milk and it's products, Oils
and Sugar and it's products respectively for each family size in both urban
and rural The first hypothesis were stated that there no differences among
the elasticity for each food group for each family size in both urban and rural.
The second hypothesis were stated that there no differences among the
elasticity for each food group among urban and rural. Generally, the elasticity
increased in rural comparison with urban for all food groups except Grains
and Sugar. Chow's test was showed that possibility of used one elasticity for
each food group for each family size in both urban and rural except Fish, and
Milk in only rural (The first hypothesis ). Dummy variables (0, 1 ) was used
with a regression model and showed the differences among the elasticity
slope for each food group for each family size (The second hypothesis ).
Economy of scale was obvious from examined data and implication of it's
effect on expenditure elasticity's were discussed.