Problem 6E

Repeat Exercise 5 with

Reference Exercise 5:

Considder the production model x = Cx + d for an economy with two sectors, where

Use an inverse matrix to determine the production level necessary to satisfy the final demand.

Week 4 Production Function - Production function: the relationship that states that the quantity of output produced depends on the quantity of inputs o In mathematical terms: Q = f (K, L) • Q represents level of output • K represents capital input • L represents labor input - Inputs: o Fixed inputs: fixed for a period of time, cannot be changed in the “short run” o Variable inputs: the firm can vary this input anytime “Long run” = however long it takes for all of your inputs to become “var