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1. Suppose an economy has four sectors A, B, C, D producing products A, B, C, D respectively. It takes 0.05 units of A, 0.02
1. Suppose an economy has four sectors A, B, C, D producing products A, B, C, D respectively. It takes 0.05 units of A, 0.02 units of B, 0.40 units of C to produce 1 unit of A. It takes 0.10 units of A, 0.08 units of C, 0.35 units of D to produce 1 unit of B. It takes 0.10 units of A, 0.04 units of B to produce 1 unit of C. It takes 0.22 units of B, 0.25 units of D to produce 1 unit of D. (a) Write down the corresponding consumption matrix. (b) Write down (I M)-1 to four decimal digits. (c) What should the total production be set at in order to satisfy an external demand of 1500 units of A, 2000 units of B, 2150 units of C, 4900 units of D? (d) Find (I M)-1 and interpret each entry in the fourth row using a complete sentence for each entry. (e) Suppose all sectors' requirements for A scale by a factor of a > 1. In other words they are now 0.05a, 0.020, 0.40a units of A, B and C respectively. For which a does this result in a sensible versus insensible economy and what is the cutoff? Explain. 1. Suppose an economy has four sectors A, B, C, D producing products A, B, C, D respectively. It takes 0.05 units of A, 0.02 units of B, 0.40 units of C to produce 1 unit of A. It takes 0.10 units of A, 0.08 units of C, 0.35 units of D to produce 1 unit of B. It takes 0.10 units of A, 0.04 units of B to produce 1 unit of C. It takes 0.22 units of B, 0.25 units of D to produce 1 unit of D. (a) Write down the corresponding consumption matrix. (b) Write down (I M)-1 to four decimal digits. (c) What should the total production be set at in order to satisfy an external demand of 1500 units of A, 2000 units of B, 2150 units of C, 4900 units of D? (d) Find (I M)-1 and interpret each entry in the fourth row using a complete sentence for each entry. (e) Suppose all sectors' requirements for A scale by a factor of a > 1. In other words they are now 0.05a, 0.020, 0.40a units of A, B and C respectively. For which a does this result in a sensible versus insensible economy and what is the cutoff? Explain
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