Consider an economy with three sectors: Fuels and Power,
Chapter 1, Problem 3E(choose chapter or problem)
Problem 3E
Consider an economy with three sectors: Fuels and Power, Manufacturing, and Services. Fuels and Power sells 80% of its output to Manufacturing, 10% to Services, and retains the rest. Manufacturing sells 10% of its output to Fuels and Power, 80% to Services, and retains the rest. Services sells 20% to Fuels and Power, 40% to Manufacturing, 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 Services output is 100 units.
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