When you meet the Elves either outside or inside the Cave (#1) at the Lakeside you’ll find out that they’re on the verge of starving. Speak with the leader, Toruviel, and she’ll give you the quest to bring back 5 Loaves of Bread. She will give you 20 Orens to pay for the bread.
You can find the Loaves of Bread by visiting the Baker in Murky Waters. Either buy them from him or search his house. The bread costs 5 Orens a loaf which means you can only buy 4 loaves for 20 Orens. If you want to be nice to the Elves buy, or find, five loaves for them anyway.
Return to Toruviel and give her the Loaves of Bread. Whether you give her four or five loaves doesn’t appear to impact anything else in the game although you will get more experience for giving her five loaves.
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