MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
A textbook economy has only two industries, the electric company and the gas company. Each dollar‘s worth of
the electric company’s output requires 0.20 of its own output and 0.4 of the gas company’s output. Each dollar’s
worth of the gas company’s output requires 0.50 of its own output and 0.7 of the electric company’s output.
What should the production of electricity and gas be (in dollars) if there is a $16 M demand for electricity and a $7
M demand for gas?
Electricity: $107.5 M; Gas: $100 M
Electricity: $125 M; Gas: $92.5 M
Electricity: $115 M; Gas: $103.5 M
Electricity: $97.5 M; Gas: $103 M
Two sectors of a textbook economy are (1) communication equipment and (2) components and accessories. In
2005 the input–output table involving these two sectors was as follows.
To Equipment Components
From Equipment 6,000 500
Components 24,000 30,000
Total Output 90,000 140,000
Determine the production levels necessary in these two sectors to meet a demand for $80,000 of equipment and $90,000
of components. Round to significant digits.
Equipment: 86,000
Components: 90,000
Equipment: 90,000
Components: 140,000
Equipment: 24,000
Components: 140,000
Equipment: 86,000
Components: 140,000
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
An economy is based on two sectors, agriculture and manufacturing. Production of a dollar’s worth of
agriculture requires an input of $0.40 from agriculture and $0.10 from manufacturing. Production of a dollar’s
worth of manufacturing requires an input of $0.20 from agriculture and $0.30 from manufacturing. Find the
output for each sector that is needed to satisfy a final demand of $16 billion for agriculture and $32 billion for
manufacturing.
$44 billion agriculture, $52 billion manufacturing
A large oil company produces three grades of gasoline: regular, unleaded, and super–unleaded. To produce
these gasolines, equipment is used which requires as input certain amounts of each of the three grades of
gasoline. To produce a dollar’s worth of regular requires inputs of $0.14 worth of regular, $0.18 worth of
unleaded, and $0.17 worth of super–unleaded. To produce a dollar’s worth of unleaded requires inputs of $0.14
worth of regular, $0.15 worth of unleaded, and $0.13 worth of super–unleaded. To produce a dollar’s worth of
super–unleaded requires inputs of $0.15 worth of regular, $0.17 worth of unleaded, and $0.11 worth of
super–unleaded. In addition, the oil company has final demands for each of the different grades of gasoline.
Find the technology matrix that would be used in determining the total output of each grade of gasoline.
M =
0.14 0.14 0.15
0.18 0.15 0.17
0.17 0.13 0.11