What is the equilibrium price and quantity of Soybeans? What is the price elasticity of demand over the price range k90 to k100 and over the range k110 and k120? Now suppose that consumers’ incomes have increased. As a result, at each price, 20 more packs of soybeans. Calculate the price elasticity of demand over the same ranges as in part (ii).
QUESTION
- The Zambian soya market is growing rapidly with some exports being recorded. Soya beans are another type of beans which provides oil and vegetable protein more than many other plants. The growth in soya beans production and processing is mainly driven by the fast-growing poultry sector. The climate in Zambia is largely favourable for soya production and the arable land is vast enough to accommodate future expansion. The growth of this market made the Soybean Market in Zambia to be ranked 20th in 2020 from previous ranking of 37th. Given that the data in the
demand and supply schedules below represents the market for Soybeans in Zambia;
|
|
Quantity Supplied (packs) |
Quantity demanded (packs) |
|
K80 |
100 |
500 |
|
K90 |
150 |
450 |
|
Price |
Quantity Supplied (packs) |
Quantity demanded (packs) |
|
K100 |
250 |
400 |
|
K110 |
350 |
350 |
|
k120 |
450 |
300 |
REQUIRED
What is the
What is the price elasticity of demand over the price range k90 to k100 and over the
range k110 and k120?
Now suppose that consumers’ incomes have increased. As a result, at each price,
20 more packs of soybeans. Calculate the price elasticity of demand over the same
ranges as in part (ii).
With the aid of a clearly labelled diagram, compare your answers from parts (ii) and
(iii), what can you conclude about the price elasticity of demand as the demand
curve shifts to the right?
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