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Assignment

The document presents an assignment with two main questions related to economic modeling and linear programming. The first question involves interpreting a technical coefficient matrix, computing the Leontief inverse, and analyzing the impact of changes in final demand on total output. The second question focuses on maximizing profit for a clock manufacturing company by formulating and solving linear programming problems related to resource constraints and product mix.

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17 views2 pages

Assignment

The document presents an assignment with two main questions related to economic modeling and linear programming. The first question involves interpreting a technical coefficient matrix, computing the Leontief inverse, and analyzing the impact of changes in final demand on total output. The second question focuses on maximizing profit for a clock manufacturing company by formulating and solving linear programming problems related to resource constraints and product mix.

Uploaded by

kindoklein27
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Assignment questions

1. Suppose the technical coefficient matrix A and final demand vector for hypothetical
economy are:

A=¿[0.1 0.2 0.3 ¿][0.2 0.25 0.2¿]¿¿¿ D=¿[40¿][60¿] ¿¿¿


¿ ¿
a
(a) With references, to 21 interpret these technical coefficients in economic terms
(b) Compute the Leontief inverse matrix
(c) Calculate the total output vector
(d) Compose an input output table for the economy if the activity sectors are agriculture,
industry and services.
(e) Suppose final demand for agriculture increases from 40 to 60, recalculate the total output
vector.
(f) Comment on the multiplier effect of the change in demand.

2. The owner of small appliances manufacturing company specializing in clocks must decide what
types and quantities of output to manufacture of each day’s sales. Let us assume that he
manufactures only two kinds of clocks-regular clocks and alarm clocks for which he may select
his product mix. We also assume that tommorow’s product mix can only be produced with the
labour, facilities and parts currently on hand. These supplies are as follows:

Number of labor hours = 1600

Number of processing hours = 1800

Number of alarm assemblies =350

The resources are related to the related to the alternative manufactured outputs, regular clocks
and alarm clocks in the following ways:

 Each unit of regular clock produced requires 2 hours of labour and hours of
processing
 Each unit of alarm clocks produced requires 4 hours of labour and 2 hours of
processing
 The profit per unit of regular clocks manufacture is $3.00,while the profit per
unit of alarm clocks manufactured is $8.00.

i. Formulate the primal linear (LP) problem and find out graphically how
many of easy type of each of clock should the owner manufacture to
maximize his profit?
ii. Formulate the dual LP of the problem (i)above
iii. If the results of a simplex solution in(i) above is as give in the Tableau
below, find the solution of the dual program and give their economic
interpretation

Row Variables Constants/Solutions


X1 X2 S1 S2 S3
0 0 0 3/2 0 2 (3,100)
1 1 0 1/2 0 -2 100
2 0 0 -3 1 10 500
3 0 1 0 0 1 350

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