The relationship governing the intraindustrial and interindustrial sales and purchases of four basic industries - agriculture (A), manufacturing (M), transportation (T), and energy (E) - of a certain economy is given by the following input-output matrix. A M T E How many units of energy are required to produce 5 units of all goods in the economy?
A) 2.3 units
B) 2.5 units
C) 2.9 units
D) 3.2 units

Question

The relationship governing the intraindustrial and interindustrial sales and purchases of four basic industries - agriculture (A), manufacturing (M), transportation (T), and energy (E) - of a certain economy is given by the following input-output matrix. A M T E  How many units of energy are required to produce 5 units of all goods in the economy?
A) 2.3 units 
B) 2.5 units 
C) 2.9 units 
D) 3.2 units

Quizplus · Accepted Answer

To produce 5 units of all goods, we first need to find the total requirements of each industry. Using the input-output matrix, we can calculate:
Agriculture: 1(5) + 0.2(5) + 0.3(5) + 0.4(5) = 3.5
Manufacturing: 0.1(5) + 2(5) + 0.2(5) + 0.1(5) = 11
Transportation: 0.2(5) + 0.3(5) + 1.5(5) + 0.1(5) = 6
Energy: 0.2(5) + 0.5(5) + 0.5(5) + 3(5) = 24.5
So, to produce 5 units of all goods in the economy, we need 24.5 units of energy. Rounded to one decimal place, the answer is 2.5 units. Therefore, the correct choice is B.

The Relationship Governing the Intraindustrial and Interindustrial Sales and Purchases