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Consider an economy with three sectors, Chemicals&Metals,
Chapter 1, Problem 3E(choose chapter or problem)
PROBLEM 3E
Consider an economy with three sectors, Chemicals&Metals, Fuels&Power, and Machinery. Chemicals sells 30% of its output to Fuels and 50% to Machinery and retains the rest. Fuels sells 80% of its output to Chemicals and 10% to Machinery and retains the rest. Machinery sells 40% to Chemicals and 40% to Fuels and retains the rest.
a. Construct the exchange table for this economy.
b. Develop a system of equations that leads to prices at which each sector's income matches its expenses. Then write the augmented matrix that can be row reduced to find these prices.
c. [M] Find a set of equilibrium prices when the price for the Machinery output is 100 units.
Questions & Answers
QUESTION:
PROBLEM 3E
Consider an economy with three sectors, Chemicals&Metals, Fuels&Power, and Machinery. Chemicals sells 30% of its output to Fuels and 50% to Machinery and retains the rest. Fuels sells 80% of its output to Chemicals and 10% to Machinery and retains the rest. Machinery sells 40% to Chemicals and 40% to Fuels and retains the rest.
a. Construct the exchange table for this economy.
b. Develop a system of equations that leads to prices at which each sector's income matches its expenses. Then write the augmented matrix that can be row reduced to find these prices.
c. [M] Find a set of equilibrium prices when the price for the Machinery output is 100 units.
ANSWER: