Question

(Solve via Excel) The economy of a small island nation is based on two​ sectors, agriculture and tourism. Production of a​ dollar's worth of agriculture requires an input of $ 0.35 from agriculture and $0.40 from tourism. Production of a​ dollar's worth of tourism requires an input of $0.43 from agriculture and $0.12 from tourism. Find the output from each sector that is needed to satisfy a final demand of $42 million for agriculture and $47 million for tourism.

- The output from the agriculture sector is approximately ___ million.

​(Round to the nearest​ million.)

- The output from the tourism sector is approximately ___ million.

​(Round to the nearest​ million.)

MUST BE SOLVED VIA EXCEL WITH FORMULAS SHOWING

Answer 1

Let x be the output from agriculture sector

and y be the output from tourism sector.

One dollar output of agriculture sector requires an input of $0.35 from agriculture and $0.40 from tourism.

Therefore total inputs for agriculture sector = $0.35x(agriculture) + $0.40x(Tourism)

One dollar output of Tourism sector requires an input of $0.43 from agriculture and $0.12 from tourism.

Therefore total inputs for Tourism sector = $0.43y(agriculture) + $0.12y(Tourism)

Since the demand for agriculture = $42 million

$0.35x + $0.43y = $42 million

Since the demand for Tourism = $47 million,

$0.40x + $0.12y = $47 million

Please follow the below to solve via excel:

1) Go to File > Options > Add-Ins > Solver Add-In > Go

2) Select Solver Add-In > Ok

3) Enter the values and formulae as shown below:

4) After entering as above, click on data tab > Solver

5) Enter the details as below:

Set Objective: $E$3

To: Max

By Changing Variable Cells: $E$1:$E:2

Subject to the constraints: Click below it and click on Add

6) Enter the details as below:

Cell Reference: $B$5

=

Constraint: $B$1

Add

Cell Reference: $B$6

=

Constraint: $B$2

OK

Unmark Unconstrained Variables Non-Negative

7) Click on Solve.

8) Click on OK

9)

10) You may cross check the values, if you wish to check.

The Output from the agriculture sector is approximately $117 million

The Output from the Tourism Sector is approximately $3 million