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Suppose that when the price of gizmos falls from $12 to $10, the quantity demanded rises from 3000 to 3600 units.
a. What's the elasticity of demand for gizmos? (3)
b. Categorize gizmo demand as elastic, inelastic or unit elastic. Justify your answer. (2)
c. Interpret the number calculated in part (a). (2)
d. If the price of gizmos rise by 15%, what exactly will happened to the quantity demanded? Compute below. (2)
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