The price elasticity of demand for snow peas between $6.00 and $7.00 per bushel is:

• A. 1.0
• B. 5.0
• C. 2.0
• D. 2.6

Answer: (D)

The key idea is that price elasticity of demand shows how much quantity demanded responds to a price move. If you move from $6 to $7, the price change on an arc basis is (7 − 6) / [(7 + 6)/2] = 1 / 6.5 ≈ 0.1538, or about 15.38%.

An elasticity magnitude of 2.6 means quantity would change by about 2.6 times that price-change percentage. So the quantity would drop by roughly 0.1538 × 2.6 ≈ 0.40, i.e., about a 40% decrease in quantity demanded over that price range. That relatively large response is what gives the elasticity its high value.

To see the intuition, a 1-dollar rise in price leads to a substantial drop in quantity for snow peas in this range, indicating elastic demand. The other numbers would imply smaller or larger proportional responses than what a 2.6 elasticity represents in this context. If initial quantity were, say, 100 bushels, the new quantity would be about 60 bushels, consistent with an elasticity magnitude of 2.6.