Find the equilibrium quantities and prices , Macroeconomics

Consider the following simple economy which consists of two industries, guns (1) and butter (2) and is characterized by the following input-output matrix.

2143_matrix 3.png

Suppose also that the input-output vector of labor inputs is a=[.2  .4]. Suppose consumers are expected to demand 10 units of guns and 20 units of butter. Also assume that the numeraire wage rate is w0=10.

a. Find the equilibrium quantities of guns and butter necessary to satisfy consumer demand.

b. Find the equilibrium prices to charge for each good.

c. Verify that the economy is in equilibrium.

d. How many workers are employed?

e. Show that profits are zero in all industries.

f. Are the Hawkins-Simon conditions satisfied? What would happen if they were not satisfied?

g. What would happen if the wage rate doubled?

Posted Date: 3/7/2013 12:15:03 AM | Location : United States







Related Discussions:- Find the equilibrium quantities and prices , Assignment Help, Ask Question on Find the equilibrium quantities and prices , Get Answer, Expert's Help, Find the equilibrium quantities and prices Discussions

Write discussion on Find the equilibrium quantities and prices
Your posts are moderated
Related Questions
What factors find out the price elasticity of demand? Factors which determine the price elasticity of demand are: a. Whether close substitutes are accessible b. Whether t

Suppose that the marginal utility of good A is 4 times the marginal utility of good B, but the price of good A is only 2 times the price of good B. Is this point consumer equilibri

multiplier static and dynamic

Q. Describe about Price level and time? We are hardly interested in the value of price level at a certain point in time. What we are interested in is percentage change in the p

The Government, Rest of the World and the financial markets Total expenditure of the government may be divided into two parts: transfers to the private sector and consumpti

Assume the residents of an economy spend all of their income on cauliflower, broccoli and carrots. In 2003 they buy100 heads of cauliflowers for Rs. 200; 50 bunch of broccoli f

The circular flow of income in a simple economy where all income is consumed  The operation of forces in an economy can be expressed in the form of a circular flow of incomes a

How would the following influence the growth rates of theM1 and M2 money supply figures over time? a. an increase in the quantity of U.S. currency held overseas b. a shift of f

Define the Consumer Prices Index Every month, the Office for National Statistics (ONS) collects information on about 120,000 prices for a 'shopping basket' of about 650 goods a

Last year, the nation of Tigerland imported goods totaling $500 million and exported products totaling $386 million. Tigerland experienced a(n).