Options are: 520, 510, 454, 596, 346 Forecast 2009 sales for Reliable given that its aircraft prices wilI increase by 6% from 2008 levels and that disposable personal income will increase by7%. Assume that the price and income effects are independent and additive and that the arc income and price elasticities you just computed are thebest available estimates of these elasticities to be used in making the forecast.Aircraft Sales 2009 Forecast: 454 10. Exercise 3.10The Reliable Aircraft Company manufactures small, pleasure-use aircraft. Based on pastexperience, sales volume appears to be affected by changes in the price of the planes and by thestate of the economy as measured by consumers' disposable personal income. The following datapertaining to Reliable's aircraft sales, selling prices, and consumers' personal income werecollected:Average Price(Dollars)Disposable Constant Income(In constant 2006 dollars, billions)Year Aircraft Sales200652517,60061020074508,00061020084008,000570

Arc elasticity of demand = (Change in Sales / Average sales) / (Change in price / Average price) =…

Forecast 2009 sales for Reliable given that its aircraft prices will increase by 6% from 2008 levels and that disposable personal income will increase by 7%. Assume that the price and income effects are independent and additive and that the arc income and price elasticities you just computed are the best available estimates of these elasticities to be used in making the forecast. Aircraft Sales 2009 Forecast: 454

Forecast 2009 sales for Reliable given that its aircraft prices will increase by 6% from 2008 levels and that disposable personal income will increase by 7%. Assume that the price and income effects are independent and additive and that the arc income and price elasticities you just computed are the best available estimates of these elasticities to be used in making the forecast. Aircraft Sales 2009 Forecast: 454

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter19: The Macroeconomic Perspective

Section: Chapter Questions

Problem 10SCQ: Explain briefly whether each of the following would cause GDP to overstate or understate the degree...

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The Reliable Aircraft Company manufactures small, pleasure-use aircraft. Based on past experience, sales volume appears to be affected by changes in the price of the planes and by the state of the economy as measured by consumers' disposable personal income. The following data pertaining to Reliable's aircraft sales, selling prices, and consumers' personal income were collected: Year Aircraft Sales Average Price Disposable Constant Income (Dollars) (In constant 2006 dollars, billions) 2006 525 16,800 610 2007 450 8,000 610 2008 400 8,000 580 The arc price elasticity of demand between 2006 and 2007 is: The arc income elasticity of demand between 2007 and 2008 is: Assume that these estimates are expected to remain stable during 2009. Forecast 2009 sales for Reliable assuming that its aircraft prices remain constant at 2007 levels and that disposable personal income will increase by 7%. Also assume that the arc…
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