Consider a simple economy consisting of three sectors: food, clothing, and shelter. The production of 1 unit of food requires the consumption of 0.4 unit of food, 0.2 unit of clothing, and 0.4 unit of shelter. The production of 1 unit of clothing requires the consumption of 0.3 unit of food, 0.4 unit of clothing, and 0.1 unit of shelter. The production of 1 unit of shelter requires the consumption of 0.2 unit of food, 0.1 unit of clothing, and 0.2 unit of shelter. Find the level of production for each sector in order to satisfy the demand for $100 million worth of food, $30 million worth of clothing, and $290 million worth of shelter. Round the answers to the nearest tenth.
A) $696.5 million worth of food
$358.8 million worth of clothing
$358.8 million worth of shelter
B) $578.2 million worth of food
$358.8 million worth of clothing
$696.5 million worth of shelter
C) $478.2 million worth of food
$328.8 million worth of clothing
$406.5 million worth of shelter
D) $696.5 million worth of food
$328.8 million worth of clothing
$578.2 million worth of shelter
E) $328.8 million worth of food
$406.5 million worth of clothing
$578.2 million worth of shelter

Question

Quizplus · Accepted Answer

This problem can be solved using input-output analysis in economics. The given requirements can be represented in a system of linear equations based on the input coefficients for each sector. Solving this system gives the total production needed in each sector to meet the final demand, resulting in $578.2 million for food, $358.8 million for clothing, and $696.5 million for shelter.

Consider a Simple Economy Consisting of Three Sectors: Food, Clothing