A company produces three products which are interdependent. These are products A, B and C. The flow of inputs and outputs between the products is represented in the table below.     Inputs (in thousands of units) Final demand     A B C Outputs (in thousands of units) A B C 80 120 160 130 260 130 150 150 50 40 120 160    Required: Derive the technical coefficients matrix.                                                               Determine the Leontief’s inverse matrix.                                              Compute the output level for each product if the final demand for product A increased by 4000 units, that of product C decreased by 2,000 units and the final demand for product B remained unchanged.

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter7: Economies Of Scale And Scope
Section: Chapter Questions
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  1. A company produces three products which are interdependent. These are products A, B and C. The flow of inputs and outputs between the products is represented in the table below.

 

 

Inputs (in thousands of units)

Final

demand

 

 

A

B

C

Outputs

(in thousands of units)

A

B

C

80

120

160

130

260

130

150

150

50

40

120

160

   Required:

  1. Derive the technical coefficients matrix.                                                              
  2. Determine the Leontief’s inverse matrix.                                             
  • Compute the output level for each product if the final demand for product A increased by 4000 units, that of product C decreased by 2,000 units and the final demand for product B remained unchanged.    
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