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    price elasticity of supply

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    As price falls from $4 to $3, quantity supplied falls from 400 units to 350 units. Price elasticity of supply is:

    A) 0.95
    B) 1.20
    C) 2.22
    D) .50

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    Hi there,
    <br>Calculating the Percentage Change in Quantity Supply
    <br>The formula used to calculate the percentage change in quantity supplied is:
    <br>[QSupply(NEW) - QSupply(OLD)] / QSupply(OLD)
    <br>By filling in the values, we get:
    <br>(350 - 400) / 400
    <br>= 12.5%
    <br>So we note that % Change in Quantity Supplied = 0.125 (This is in decimal terms. In percentage terms it would be 12.5%). Now we need to calculate the percentage change in price.
    <br>Calculating the Percentage Change in ...