Question

An economy is based on three sectors, agriculture, manufacturing, and energy. Production of adollar’s worth of agriculture requires inputs of $0.30 from agriculture, $ 0.30 frommanufacturing, and $0.30 from energy. Production of a dollar’s worth of manufacturing requires inputs of $0.30 from agriculture, $0.20 from manufacturing, and $0.20 from energy. Production of a dollar’s worth of energy requires inputs of $0.20 from agriculture, $0.30 frommanufacturing, and $0.30 from energy.

Find the output for each sector that is needed to satisfy a final demand of $67 billion foragriculture, $34 billion formanufacturing, and $14 billion for energy.

1) The output of the agricultural sector is ___ billion dollars

2) The output of the manufacturing sector is __ billion dollars

3) The output of the energy sector is __ billion dollars

Answer 1

a) Production of dollar's worth of agriculture requires inputs of $0.30 from agriculture, $0.3 from manufacturing and $0.3 from energy,

Thus to create $67 billion for agriculture we need $20.1 billion from Agriculture, $20.1 from manufcturing and $20.1 billion from energy.

b) Production of dollar's worth of manufactring requires inputs of $0.30 from agriculture, $0.20 from manufacturing and $0.20 from energy,

Thus to create $34 billion for agriculture we need $10.2 billion from Agriculture, $6.8 billion from manufcturing and $6.8 billion from energy.

c) Production of dollar's worth of energy requires inputs of $0.20 from agriculture, $0.30 from manufacturing and $0.30 from energy,

Thus to create $14 billion for agriculture we need $2.8 billion from Agriculture, $4.2 billion from manufcturing and $4.2 billion from energy.

1) The output of the agriculturral sector,

Output = $67 + $20.1 + $10.2 + $2.8

Output = $100.1 biliion

2) The output of the manufacturing sector,

Output = $34 + $20.1 + $6.8 + $4.2

Output = $65.1 biliion

3) The output of the energy sector,

Output = $14 + $20.1 + $6.8 + $4.2

Output = $45.1 biliion