1.

Suppose that in an economy there are only two goods X and Y, can both goods
be simultaneously "inferior"?

Such a scenario would not be possible in such an economy, since there are two
goods (X and Y) and one of them would have to be inferior and the other a normal
good. Since, according to what the problem implies, individuals in the economy
would consume less of both goods when their monetary income increases,
therefore all their income would not be spent, this approach has no correlation
with economic theory.

Therefore, the most logical thing would be that in the economy there is a good
that the consumer stops buying when his income increases, i.e. the inferior good,
and therefore he will consume more of the normal or superior good, since he
could afford it with his new income.

2. Sheyla owns a pet retail store. You know that the price elasticity of demand for
animals in your district is 0.8 (absolute value) and you want to know what the
price elasticity of demand for pug dogs will be in order to set your selling price,
can you help you guess what the elasticity will be?

a. Greater than the elasticity of demand for animals.

b. Lower than the elasticity of demand for animals.
c. Same as the elasticity of demand for livestock.
Sheyla has the information that the price elasticity of demand for animals in her
district is 0.8 that is to say that it has an inelastic demand, that is to say that if Sheyla
decides to fix the selling price of animals among them the pug dogs in a high amount, it
practically does not affect the quantities demanded, therefore intuitively having a store
that has a certain degree of power, perhaps because there is not so much competition, it
is assumed that her animals among them the pug dogs also manage such an inelastic
demand.s because there is not so much competition, it is assumed that her animals,
among them the pug dogs, also handle such inelastic demand, therefore the value that
would assume its elasticity would also be 0.8
Below is a table with the values of the price elasticity of demand for different goods and services
of the Alfa & Omega country.

Well Price elasticity of Type of demand Q`

demand
Salt 0.1 Inelastic Demand 2.5%
Water 0.2 Inelastic Demand 5%
Footwear 0.7 Inelastic Demand 17.5%
Housing 1.0 Unit Demand 25%
Automobiles 1.2 Elastic Demand 30%
Air travel 2.4 Elastic Demand 60%

a. Indicate the demand for these goods

Salt >>>>>>> Inelastic Demand
Water >>>>>>> Inelastic Demand
Footwear >>>>>>> Inelastic Demand
Housing >>>>>>> Unit demand
Automobiles >>>>>>> Elastic Demand
Air travel >>>>>>> Elastic Demand

b. The change in the quantity purchased of each item if its price decreases by 25%.

SAL
 ∆%Q/∆%P=│0.1│
∆%Q/25%=0.1
∆%Q = 2.5%

WATER
 ∆%Q/∆%P=│0.2│
∆%Q/25%=0.2
∆%Q = 5%

SHOES
 ∆%Q/∆%P=│0.7│
∆%Q/25%=0.7
∆%Q = 17.5%
 HOUSING
 ∆%Q/∆%P=│1.0│
∆%Q/25%=1.0
∆%Q = 25%

AUTOMOBILES
 ∆%Q/∆%P=│1.2│
∆%Q/25%=1.2
∆%Q = 30%

AIR TRAVEL
 ∆%Q/∆%P=│2.4│
∆%Q/25%=2.4
∆%Q = 60%