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Unformatted text preview: a 12 = . 2 200 = 1000 * a 21 ⇒ a 21 = . 2 50 = 500 * a 22 ⇒ a 22 = . 1 Using INFO2, Y 1 = 1050 and Y 2 = 400. (Remember that the Y s are demands for steel and grain as ﬁnal goods. Total demand = Govt. demand + Consumer demand + Foreigners’ demand.) 2 Using INFO3, M 1 = ,M 2 = 100 ,V 1 = 200 ,M 2 = 0. Plugging everything into the two equations you need to solve, get 200 + X 1 = . 05 X 1 + . 2 X 2 + 1050 100 + X 2 = . 2 X 1 + . 1 X 2 + 400 Solve for X 1 in the ﬁrst equation: X 1 = 1 . 95 ( . 2 X 2 + 850 ) Plug this expression for X 1 into the second equation, 100 + X 2 = . 2 1 . 95 ( . 2 X 2 + 850 ) + . 1 X 2 + 400 You can use simple algebra to solve this for X 2 . If you round the solution to the integer, you should get X 2 = 554 . Plug this back into the expression for X 1 (and round) to get X 1 = 1011. Therefore, the state should produce 1011 tons of grain and 554 tons of steel....
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This note was uploaded on 12/29/2010 for the course ECON 4313 taught by Professor Staff during the Fall '08 term at Minnesota.
 Fall '08
 Staff

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