Question 1 . Which of the statements below is not true with respect to Leontiefs

Question

Question 1 . Which of the statements below is not true with respect to Leontiefs "Exchange Model" for economy? A. We assume that economy has various sectors and that we know total output for each sector and how it is divided B. The total dollarvalue ofeach sector's output (income, price) C. With the equilibrium prices assigned to the total output for . Balancing the income and total expenses for each sector E The linea among other sectors. has to be determined and assigned to a sector each sector, its income balances its total expenses. gives a rise to a linear system which defines the equilibrium D, prices r system for finding the equilibrium prices is nonhomogeneous and may have no solution.

Explanation / Answer

Answer : (E). The linear system for finding the equilibrium prices is non-homogeneous and may have no solution.

Reason:

Linear system for finding the equilibrium prices is homogeneous and accordingly, have a unique solution

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