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Question 6 (9 points) In a two sector economy, production of a dollar's worth of agriculture output requires an input of $0.40 from agriculture and
Question 6 (9 points) In a two sector economy, production of a dollar's worth of agriculture output requires an input of $0.40 from agriculture and $0.20 from manufacturing industry. Production of a dollar's worth of manufacturing output requires an input of $0.15 from agriculture and $0.30 from manufacturing industry. a. Find the necessary levels of output (in $ billions) by agriculture and manufacturing industries if there is also a surplus (final demand) of $16 billion for agriculture and $36 billion for manufacturing. (7 points) b. If there is a reduction in the surplus (final demand) for manufacturing output by $6 billion while the surplus (final demand) for agriculture remains the same, what would be the outputs that should be produced by the two sectors to meet the total demand? (2 points)
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