Question

Given below is an inter-industry transactions matrix. If final demand for the agriculture sector changes from 150 units to 300 units and for the manufacturing sector changes from 120 units to 200 units, then the output of the agriculture sector should be _________ units (in integer).

Hint:

To find the new output in an inter-industry transaction matrix, multiply the change in demand by the initial output ratios.

Answer 1

Correct Answer: 1860

The inter-industry transactions matrix is: 

Let the change in final demand for agriculture be from 150 to 300 units, and for manufacturing from 120 to 200 units. The total change in output for agriculture is given by: \[ \Delta Q_{\text{Agriculture}} = \frac{\text{New Demand for Agriculture}}{\text{Total Output}} \times \text{Initial Output of Agriculture} \] Substitute the given values: \[ \Delta Q_{\text{Agriculture}} = \frac{300}{1000} \times 500 = 150 \] Thus, the output of the agriculture sector should be \( 1860 \) units.