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 The arc income elasticity of demand between 2007 and 2008 is:-3.993.99-1.74o 1.74

The increase in income leads to an increase in the sale of seats in the aircraft. The increase in…

Answered: The arc income elasticity of demand…

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The arc income elasticity of demand between 2007 and 2008 is:

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

ChapterA: Working With Diagrams

Section: Chapter Questions

Problem 1QP

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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

The arc income elasticity of demand between 2007 and 2008 is:
-3.99
3.99
-1.74
o 1.74

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