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Suppose an economy has four sectors: Mining, Lumber, Energy, and Transportation.

ID: 3075642 • Letter: S

Question

Suppose an economy has four sectors: Mining, Lumber,
Energy, and Transportation. Mining sells 10% of its output
to Lumber, 60% to Energy, and retains the rest. Lumber
sells 15% of its output to Mining, 50% to Energy, 20% to
Transportation, and retains the rest. Energy sells 20% of its
output to Mining, 15% to Lumber, 20% to Transportation,
and retains the rest. Transportation sells 20% of its output to
Mining, 10% to Lumber, 50% to Energy, and retains the rest.
a. Construct the exchange table for this economy.
b. [M] Find a set of equilibrium prices for the economy.

Explanation / Answer


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