Question

the coefficient for soybean in 3.85, if the price goes up 25 percent how much will the demand decrease?

Answer 1

Answer - The coefficient for soybean is 3.85. This is elasticity of demand for soybean. If price goes up by 25 percent, then demand for soybean would decrease. There is negative relation between price and demand of good. We know that,

Elasticity of demand is = Percentage change in quantity demanded / percentage change in price

3.85 = % change in demand for soybean / 25

(3.85)* 25 = %change in demand

96.25 % = change in demand

Thus we can say demand for soybean will decrease by 96.25% if price of soybean goes up by 25%.