An economy consists of three sectors: agriculture, manufacturing, and energy. The prices of outputsrof these three industries
Question:
An economy consists of three sectors: agriculture, manufacturing, and energy. The prices of outputsrof these three industries are $5, $4, and $2 respectively. Production of a unit of agricultural productrrequires 0.25 units from agriculture, 0.4 units from manufacturing, and 0.3 units from energy.rProduction of a unit of manufacturing product requires 0.2 units from agriculture, 0.5 units fromrmanufacturing, and 0.4 units from energy. Production of a unit of energy requires 0.1 units fromragriculture, 0.2 units from manufacturing, and 0.2 units from energy. The agriculture, manufacturing,rand energy face the following external, or final, demands: 500, 800, and 400 respectively.r
(a) Write down the equations of the Leontief model for this economy.r
(b) Write the system of equations from part (a) above in the matrix notation. If you introduce a matrixror vector, show explicitly the elements of that matrix or vector.r
(c) Find the unit value added in industry 3. Explain.r
(d) The solution to the Leontief model is x, =2676.69, x, =5428.57, x, =4218.04. Find the valueradded in industry 3. Explain.r
