Find the equilibrium quantities and prices , Macroeconomics

Assignment Help:

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?


Related Discussions:- Find the equilibrium quantities and prices

Nominal interest rate of 15% compounded annually, An investor has a series ...

An investor has a series of three $15,000 payments expected to be realized at the end of years three, four, and five. Calculate the present value P at time zero and the correspondi

Inverse market supply curve, Consider the market for the trusty widget (the...

Consider the market for the trusty widget (the most common good in the world if economics textbooks are to be believed). Assume that the market is perfectly competitive. Suppose th

Opportunity set, constructing a opportunity set and budget line for $15 lot...

constructing a opportunity set and budget line for $15 lottery ticket and intending on buying a candy bar for $0.75 and peanut bag for $1.50

Measurement of output, Different approaches to measure aggregate output

Different approaches to measure aggregate output

Budget balanced, Given a four sector economy how do you find the budget bal...

Given a four sector economy how do you find the budget balanced

Price level depends on current money supply and future, If the price level ...

If the price level depends on both the current money supply and future expected money supplies, in order to stop a hyperinflation, a central bank may try to establish credibility b

How do trade barriers affect international trade, Trade barriers come in a ...

Trade barriers come in a lot of forms. Quota is one. This is when a country sets a limit to the imported products. This is completed for a number of reasons. One is due to the gove

Circular flow of income in a closed economy, circular flow of income in a s...

circular flow of income in a single sector,two sector,three sector and four sector

National income, what are the advantages and disadvantages of a national in...

what are the advantages and disadvantages of a national income and green GDP? national income figures are often used to compare living standards across countries and through time.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd