Final answer:
To calculate the price elasticity of demand from a price increase of $14 to $16, the change in quantity demanded is required but not provided. The midpoint formula is used for the calculation, but without the change in quantity, we cannot determine the elasticity.
Step-by-step explanation:
The price elasticity of demand is a measurement of how responsive the quantity demanded is to a change in price. To calculate the elasticity when price increases from $14 to $16 using the midpoint formula, we need to know the corresponding changes in the quantity demanded. Unfortunately, this information is not provided in the question, thus we cannot compute the elasticity. However, we can discuss the concept. The midpoint formula is given by:
(Q2 - Q1) / [(Q2 + Q1)/2] รท (P2 - P1) / [(P2 + P1)/2]
Where Q1 and Q2 are the initial and final quantities, and P1 and P2 are the initial and final prices. Once we have the initial and final quantities, we can use the midpoint formula to calculate the elasticity. If the elasticity is greater than 1, the demand is considered to be elastic, meaning that the quantity demanded changes by a larger percentage than the price change. If the elasticity is less than 1, the demand is inelastic, indicating that the quantity demanded changes by a smaller percentage than the price. An elasticity of exactly 1 indicates unitary elasticity, where the percentage change in quantity matches the percentage change in price.