Question

Consider an economy that consists of three industries: an agricultural industry, a mining industry, and a manufacturing industry. To produce one unit of agricultural output, the agricultural sector requires $0.3 of its own output, $0.2 of mining output, and $0.4 of manufacturing output. To produce one unit of mining output, the mining sector requires $0.2 of its own output, $0.5 of agricultural output, and $0.2 of manufacturing output. To produce one unit of manufacturing output, the manufacturing sector requires $0.3 of its own output, $0.3 of agricultural output, and $0.3 of mining output. Final demands by consumers amount to $20,000, $10,000, and $40,000 for goods 1, 2, and 3, respectively. Use Cramer’s rule to find the equilibrium quantities of output for the three sectors.

Answer 1