Solve the problem.
-A simplified economy has only two industries, the electric company and the gas company. Each dollar's worth of the electric company's output requires 0.20 of its own output and 0.4 of the gas Company's output. Each dollar's worth of the gas company's output requires 0.50 of its own output And 0.7 of the electric company's output. What should the production of electricity and gas be (in Dollars)if there is a $16 million demand for electricity and a $7 million demand for gas?
A)Electricity: $107.5 million; gas: $100 million
B)Electricity: $115 million; gas: $103.5 million
C)Electricity: $125 million; gas: $92.5 million
D)Electricity: $97.5 million; gas: $103 million

Question

Solve the problem.
-A simplified economy has only two industries, the electric company and the gas company. Each dollar's worth of the electric company's output requires 0.20 of its own output and 0.4 of the gas Company's output. Each dollar's worth of the gas  company's output requires 0.50 of its own output And 0.7 of the electric company's output. What should the production of electricity and gas be (in Dollars)if there is a $16 million demand for electricity and a $7 million demand for gas?
A)Electricity: $107.5 million; gas: $100 million
B)Electricity: $115 million; gas: $103.5 million
C)Electricity: $125 million; gas: $92.5 million
D)Electricity: $97.5 million; gas: $103 million

Quizplus · Accepted Answer

To solve this, we set up equations based on the given information. Let E be the production of electricity and G be the production of gas. The equations are:1. E = 0.20E + 0.4G + 16 (since each dollar of electricity requires 0.20 of its own output and 0.4 of gas, plus the demand)2. G = 0.50G + 0.7E + 7 (since each dollar of gas requires 0.50 of its own output and 0.7 of electricity, plus the demand)Solving these equations simultaneously gives us E = $107.5 million and G = $100 million.

Solve the Problem. -A Simplified Economy Has Only Two Industries, the Electric Company