Upgrade/Downgrade handling by PayPal gateway

Hi,

Let's say we have the follwing user levels setup and pricing:
Monthly Quarterly Yearly
1st $10 $30 $100
2nd $20 $60 $200
3rd $30 $90 $300
4th $40 $120 $400

Using PayPal, I have following questions regarding subscription upgrade/downgrade handling:
<scenario #1>
1. User signup with 1st level at $100/year.
2. During the 2nd month on 20th day, user decides to upgrade to 3rd level at $300/year.
3. How does current PayPal gateway handle this situation?
4. Does it simply charge addition $200 for the 1st year and $300 there after? Or does it calculate the difference on some kind of prorate formula? If so what is that?

<scenario #2>
1. User signup with 3rd level at $300/year.
2. During the 7th month on 5th day, user decides to downgrade to 2nd level at $200/year.
3. How does current PayPal gateway handle this situation?
4. Does it simply refund the difference of $100 for the 1st year and charge $200 there after? Or does it calculate the difference on some kind of prorate formula? If so what is that?

Thanks in advance.