6· +-4 points My No Two sectors of the U.S. economy are (1) audio, video, and co

Question

6· +-4 points My No Two sectors of the U.S. economy are (1) audio, video, and communication equipment and (2) electronic components and accessories. Suppose in 1998, the input-output table involving these two sectors was as follows (all figures are in millions of dollars) Determine the production levels necessary in these two sectors to meet an external demand for $81,000 million of communication equipment and $88,000 million of electronic components. Round answers to two significant digits. million million To Equipment Components From Equipment 5,800 Components 23,000 30,000 Total Output 90,000 140,000 Submit Answer

Explanation / Answer

81,000 mn (81 bn) $ of communication equipment and 88,000mn (88 bn) $ if electronic components are required to meet an external demand.

Let equipment = E and let components = C;

From input- output table:
90,000 mn Eo = 5800 mn E + 23,000 mn C - eqn A
140,000 mn Co = 600 mn E + 30,000 mn C - eqn B

for 81,000 E0, multiply equation A with 0.9
0.9 * 90,000 mn Eo = (5800 mn E + 23,000 mn C ) 0.9
81 bn Eo = 5.22 bn E + 20.7 bn C

Similarly for 88 bn Co , multiply eqn B with 22/35
22/35 * 140,000 mn Co = (600 mn E + 30,000 mn C ) 22/35
88 bn Co = 0.377 bn E + 18.857 bn C

Thus, collectively for 81 bn$ of equipment & 88 bn $ of component we need = (5.22 + 0.377 ) E (20.7 + 18.857) C
= 5.597 bn $ worth communication equipment and 39.557 bn $ worth of electronic component

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