Chapter 4, Problem 51RE

Input-output analysis. An economy is based on two industrial sectors, agriculture and fabrication. Production of a dollar’s worth of agriculture requires an input of $\$0.30$ from the agriculture sector and $\$0.20$ from the fabrication sector. Production of a dollar’s worth of fabrication requires $\$0.10$ from the agriculture sector and $\$0.40$ from the fabrication sector.

(A) Find the output for each sector that is needed to satisfy a final demand of $\$50$ billion for agriculture and $\$20$ billion for fabrication.

(B) Find the output for each sector that is needed to satisfy a final demand of $\$80$ billion for agriculture and $\$60$ billion for fabrication.