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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

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 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

10. Exercise 3.10
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:
Average Price
(Dollars)
Disposable Constant Income
(In constant 2006 dollars, billions)
Year Aircraft Sales
2006
525
17,600
610
2007
450
8,000
610
2008
400
8,000
570

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