Price Elasticity of Supply Calculation

Steps:

• Price elasticity of supply (Es) = (% change in quantity supplied) / (% change in price).
• % change in quantity supplied = Es × % change in price = 2 × 30% = 60%.
• New quantity supplied = original quantity × (1 + 60/100) = 200 × 1.6 = 320 units.

Why D is correct:

• 320 units results directly from applying the elasticity formula, where Es measures responsiveness of supply to price changes.

Why the others are wrong:

• A: 80 units assumes a 60% decrease, inverting the positive supply elasticity.
• B: 140 units reflects a 30% decrease, confusing supply with inelastic response.
• C: 260 units implies 30% increase, ignoring the elasticity multiplier of 2.

Final answer: D