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Appendix C C-99<br />
As in the solution in Section 11.2, we start by using x, y, and z to represent<br />
the required number of units of steel, coal, and electricity, respectively. Next,<br />
define three matrices, A, D, and X as follows:<br />
0.04 0.02 0.16<br />
10<br />
x<br />
A ° 0.12 0 0.30 ¢ D ° 12 ¢ X ° y ¢ (4)<br />
0.16 0.10 0.04<br />
15<br />
z<br />
The input-output matrix, The demand The matrix<br />
based on Table 1 matrix based of unknowns<br />
on Table 2<br />
Your tasks now are to work through the following steps to solve this inputoutput<br />
problem using matrix methods.<br />
1. Check that the matrix product AD is defined. What will be the dimension<br />
of the product AD?<br />
2. Explain why the matrix equation AX D X holds. Hint: In the project<br />
for page C-91 look at the equation immediately preceding equation (2).<br />
3. Use equation (2) from part I of this project to solve the equation<br />
AX D X. Make use of a graphing utility in carrying out the matrix operations,<br />
and round the answers for x, y, and z to two decimal places.<br />
PART III: A Seven-Sector Model of the U.S. Economy<br />
The input-output examples above (and in the project on page C-91) involve<br />
two- or three-sector economies. By way of contrast, input-output tables for the<br />
U.S. economy (published by the U.S. Bureau of Economic Analysis) involve<br />
as many as 486 sectors. Table 3, which follows, is an aggregated version of one<br />
of those tables, in which the 486 sectors have been grouped into only 7 general<br />
categories or sectors. The names of the 7 sectors, abbreviated in Table 3, are<br />
spelled out in Table 4, which contains the external demands. Use a graphing<br />
utility to solve the input-output problem for this seven-sector economy. Round<br />
the final answers to the nearest integer. Then, given that each unit represents<br />
one million dollars, express the answers in dollars.<br />
TABLE 3 Seven-Sector Input-Output Table for the 1967<br />
U.S. Economy*<br />
Outputs<br />
Ag Min Con Mfg T & T Serv Oth<br />
Inputs<br />
Ag .2939 .0000 .0025 .0516 .0009 .0081 .0203<br />
Min .0022 .0504 .0090 .0284 .0002 .0099 .0075<br />
Con .0096 .0229 .0003 .0042 .0085 .0277 .0916<br />
Mfg .1376 .0940 .3637 .3815 .0634 .0896 .1003<br />
T & T .0657 .0296 .1049 .0509 .0530 .0404 .0775<br />
Serv .0878 .1708 .0765 .0734 .1546 .1676 .1382<br />
Oth .0001 .0054 .0008 .0055 .0183 .0250 .0012<br />
TABLE 4<br />
External<br />
Demands for<br />
1967 U.S.<br />
Economy<br />
External Demands<br />
Agriculture 9300<br />
Mining 1454<br />
Construction 85,583<br />
Manufacturing 278,797<br />
Trade & transportation 141,468<br />
Services 211,937<br />
Others 2453<br />
*Derived from more detailed tables published by the U.S. Bureau of Economic Analysis.<br />
Source for Tables 3 and 4: Input-Output Analysis: Foundations and Extensions, Ronald E.<br />
Miller and Peter D. Blair (Englewood Cliffs, N.J.: Prentice Hall, 1985)