The price elasticity of demand (based on the midpoint formula) when price decreases from $16 to $14 is

The price elasticity of demand (based on the midpoint formula) when price decreases from $16 to $14 is -1.36.

Explanation:

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The explanation to the answer is now given as follows:

The price elasticity of supply can be described as the degree of responsiveness of quantity demanded to the change in price.

The midpoint method of estimating the price elasticity of demand uses the average percentage change in both quantity and price.

From the question, we have:

New quantity demanded = 24

Old quantity demanded = 20

New price = $14

Old price = $16

Generally, the formula for calculating the price elasticity of demand is as follows:

Price elasticity of demand = Percentage change in quantity demanded / Percentage change in price (1)

Where, based on the midpoint formula, we have:

Percentage change in quantity demanded = {(New quantity demanded - Old quantity demanded) / [(New quantity demanded + Old quantity demanded) / 2]} * 100 = {(24 - 20) / [(24 + 20) / 2]} * 100 = 18.1818181818182%

Percentage change in price = {(New price - Old price) / [(New price + Old price) / 2]} * 100 = {(14 - 16) / [(14 + 16) / 2]} * 100 = -13.3333333333333

Substituting the values into equation (1), we have:

Price elasticity of demand = 18.1818181818182% / -13.3333333333333 = -1.36363636363637

Approximated to 2 decimal places, we have:

Price elasticity of demand = -1.36

Therefore, the price elasticity of demand (based on the midpoint formula) when price decreases from $16 to $14 is -1.36.