1- An increase in taxi fares in Muscat will improve the expenditures on rides if:

1. The supply of taxi rides is elastic B) the supply of taxi rides is inelastic

3. Your demand for taxi rides is inelastic D) Your demand for taxi rides is inelastic

_____ 2- Which of the following is most likely an inferior good?

A) A Bentley Intercontinental automobile C) An Instamatic Kodak camera

B) An original work of art D) A luxury vacation.

_____3- If a good is normal, then an increase in income will result in:

A) an increase the demand for the good.

B) a decrease the demand for the good.

C) a movement to the right along the demand curve.

D) a movement to the left along the demand curve.

_____ 4- Suppose the computer prices at an office supply store fall from $1000 to $900 and as a result the quantity demanded of typewriters decreases from 40 to 20 per month. The cross price elasticity is closest to:

A) 0.16 B) 0.2 C) 5.0 D) 6.3

_____ 5- : All necessities have no substitutes/or less substitutes will have an inelastic demand. Examples of these type of goods are:

A) Transportation and communication

B) Power and water

C) Housing and medicine

D) Services

_____6- Of the following, demand is likely to be least elastic for

A) Toyota automobiles

B) compact disc players

C) Ford automobiles

D) Toothpicks

_____7- The larger the number of uses to which a commodity can be put, the higher will be its elasticity. Examples of these products are:

A) rice and wheat

B) iron ore

C) sugar

D) milk and egg

II. Compute for the income or cross price elasticity. Write the resulting elasticity and the type of good as required in some of the numbers.

1- Suppose income falls 1 percent in a year and as a result construction of new parks falls from 18 million to 16 million units annually. The value of the income elasticity of demand for parks is:

2- An decrease in income from 3,000 to 2,000 causes demand for restaurant meals to decrease from every week to twice a month. Calculate for income elasticity and identify the type of good.

3- Solve for the elasticity of demand for Good X with respect to the price of Good Y.

Demand for	Original Price	Original Quantity	New Price	New Quantity
Commodity X		30		20
Commodity Y	21	65	25	50

4- Calculate the income elasticity of demand for each of the following goods. Write the type of elasticity/type of good

Goods Type	Qty Demand at Income = 10000	Qty Demand at Income = 20000
Refrigerator	10	25
Sofa	4	5
Bread	3	2