The Reliable Aircraft Company manufactures small, pleasure-use aircraft. Based on past experience, salesvolume appears to be affected by changes in the price of the planes and by the state of the economy asmeasured by consumers' disposable personal income. The following data pertaining to Reliable's aircraftsales, selling prices, and consumers' personal income were collected:YearAIRCRAFT SALESAVERAGE PRICEDISPOSABLEPERSONALINCOME2006525$17,200$61020074508,00061020084008,000590Present your results in the form of a short report (maximum 1500 words) with the followingelements:1- A brief introduction to report. This should include an indication of the form of the model used,including the expected signs of the coefficients for each variable (use quality academic resourcesin this area, why do you think these factors affect the den2- An analysis of each variable in the model. This should include:function).An interpretation of each estimated coefficientA discussion of whether sign of the estimated coefficient met your expectationTesting the validity of each variable using the p-value3- Estimate the price elasticity of demand using the 2006 and 2007 data. (Write the calculationformula)4- Estimate the income elasticity of demand using the 2006 and 2007 data. (Write the calculationformula)5- Give a brief conclusion. Summarize why you think the model is good or not. Indicate whichvariables are significant and which are not. In a second paragraph, discuss which potentialproblems might be relevant in this case. This includes the problems they lead to and potentialsolutions.

Answer- (3) Here Given, Aircraft sale in 2006 and 2007 respectively 525 and 450. Average price of…

3- Estimate the price elasticity of demand using the 2006 and 2007 data. (Write the calculation formula) 4- Estimate the income elasticity of demand using the 2006 and 2007 data. (Write the calculation formula)

3- Estimate the price elasticity of demand using the 2006 and 2007 data. (Write the calculation formula) 4- Estimate the income elasticity of demand using the 2006 and 2007 data. (Write the calculation formula)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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