com mmodity n ses s then the ele ements in th

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: nput cost (not i p including th cost of th primary input) he he incur rred in prod ducing a dollar's worth of some co ommodity; if this sum is greater than or equal to 1 then pro o oduction wo ould not be economica justifiable. ally Symbolically, th fact can be stated a follows: his as 222 re mation is ov i, that is over the e ver s, elements appearing in the variou n us wher the summ rows of a specif column j s fic j. Takin this line of thought a step furth it may also be sta ng her, ated that, sin the nce value of output ($1) must b fully abs e be sorbed by th payment to all fact he ts tors of production, the amount by which the column sum falls shor of $1 mus be the y m rt st value of the pay e yment to the primary in e nput (labou of the op sector. ur) pen Thus the value of the prim s, mary input n needed in p producing a unit of the jth comm modity shou be: uld If ind dustry 1 is to produce a output ju sufficien to meet the input req o an ust nt quirements s of the n industries as well a the final demand of the open s e as f sector, its o output level l x1 must satisfy the followin equation: t ng x1 = a11x1 + a12x2 + a13x3 +... a1nxn + d1 ...+ or (1 a11) x1 a12x2 a13x3 - ... - a1nxn = d1 re es or t epresents t input the wher d1 denote the final demand fo its output and a1jxj re 3 dema from th jth industry. Notice that, exce for the f and he e ept first coefficie (1 ent a11), the remain ning coeffici ients in the last equation are exac the first row of the ctly t e matrix on page 3 above ex xcept they a all nega are ative. Similarly, the corre esponding equation for industry 2 will have t same co e the oefficients a in the as seco row of the matrix o page 3 a ond on above, exce that the variable x2 will have ept the c coefficient (1 a22) ins stead of a22. For t entire se of n indu the et ustries, the "correct" ou utput levels can be sum s mmarized by th following system of n linear eq he g quations: 3 Do n add up the input coeffic not e cients across a row; such a sum say, a11 + a12 + a1 +...+ a1n is 13 devoid of economic meaning. T sum of...
View Full Document

This note was uploaded on 05/25/2010 for the course ECON 301 taught by Professor Sning during the Spring '10 term at University of Warsaw.

Ask a homework question - tutors are online