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Matrices - Economics based question

  1. Mar 26, 2008 #1
    1. The problem statement, all variables and given/known data
    An island's economy is divided into three sectors-tourism, transportation, and services. Suppose that each dollars worth of tourism output requires inputs of $0.30 from the tourism sector, $0.10 from the transportation sector, and $0.30 from the services sector; each dollars worth of transportation output requires inputs of $0.20 from the tourism sector, $0.40 from the transportation sector, and $0.20 from the services sector; and each dollars worth of services output requires inputs of $0.05 from the tourism sector, $0.05 from the transportation sector, and $0.15 from the services sector.

    (a) Write the consumption matrix for this economy.

    (b) If the gross production for this economy is $10 million of tourism, $15 million of trans-
    portation, and $20 million of services, how much input from the tourism sector is required
    by the services sector?

    (c) If the gross production for this economy is $10 million of tourism, $15 million of trans-
    portation, and $20 million of services, what is the total value of the inputs consumed by
    each sector during the production process?

    (d) If the total outputs of the tourism, transportation, and services sectors are $70 million, $50million, and $60 million, respectively, what is the net production of each sector?

    (e) What gross production is required to satisfy exactly a demand for $30 million of tourism, $50 million of transportation, and $40 million of services?

    3. The attempt at a solution
    I'm stuck on part d), but I'll show you my answers and working for previous parts anyway...

    a)
    [​IMG]

    b) $1,000,000 worth of input is required by the services sector from the tourism sector

    c) total value of inputs consumed by the tourism sector is $7,000,000
    total value of inputs consumed by the transport sector is $12,000,000
    total value of inputs consumed by the services sector is $5,000,000

    d) I don't understand how one calculates "net production".
     
  2. jcsd
  3. Mar 27, 2008 #2
    *up to the top*
     
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