2. Consider this very simple open economy which shows the input required for every dollar of
output:
Output
Housing
Food
Utilities
Transportation
Services
Housing
$0.10
$0.12
$0.11
$0.15
$0.12
Food
$0.05
$0.10
$0.08
$0.11
$0.08
Input
Utilities
$0.25
$0.25
$0.15
$0.19
$0.30
Transportation
$0.10
$0.30
$0.11
$0.07
$0.21
Services
$0.30
$0.30
$0.40
$0.20
$0.35
a. Suppose the open sector has a demand for $12,100 worth of housing, $11,500 worth of
food, $8,200 worth of utilities, $9,100 worth of transportation, and $21,000 worth of
services. Find the production vector x that will meet these demands exactly.
b. Determine if the economy is profitable. Give a one-sentence explanation of your answer.
c. Determine if the economy is productive. Give a one-sentence explanation of your answer.
