# 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>

<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>

<br>By filling in the values, we get:

<br>

<br>(350 - 400) / 400

<br>

<br>= 12.5%

<br>

<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>

<br>Calculating the Percentage Change in ...

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