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:

The arc price elasticity of demand between $2006$ and $2007$ is:

$-0\mathrm{.}41$

$0$

$-0\mathrm{.}23$

$0\mathrm{.}23$

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

$2\mathrm{.}33$

$0$

$-5\mathrm{.}36$

$-2\mathrm{.}33$

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 income elasticity you just computed is the

best available estimate of income elasticity.

Aircraft Sales $2009$ Forecast:

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: