Matrices and Determinants - Question Bank 3 -

Input-Output Analysis
NEP Batch – Semester 3
Question 1: For the following input-output table, prepare the technology matrix and also write the
balance equations for the two sectors:

Sector X Y Final
Demand
X 50 150 200

Y 100 75 100

Question 2: Consider an economy comprising agriculture, manufacturing, and service factors. The
hypothetical flow of goods and services in physical units is summarized below:

Sectors Agriculture Manufacturing Service Final Demand

Agriculture 60 180 0 120
Manufacturing 30 60 30 180
Service 0 40 10 100

What shall be the new output if the demand changes to 150, 160,180? (Calculate up to two decimals)

Question 3: A country produces only two goods X and Y. The input-output coefficient matrix is given
as A 0.3 0.6
0.5 0.0 and the primary input coefficients are 0.2 0.4 for products X and Y
, respectively. The final demand for X is 10 and that for Y is 5.
(a) Write down the input-output model as a set of linear simultaneous equations.

(b) Test Simon- Hawkins conditions for viability.

(c) Determine the output solution and also the total primary input requirement.

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 Matrices and Determinants - Question Bank 3 -
Input-Output Analysis
NEP Batch – Semester 3

Question 4: Suppose the inter-industry flow of the products of two industries is given as under:

Production Consumption Domestic Total

Sector Sector Demand Output

X 30 40 50 120

Y 20 10 30 60

Labour 40 20

(a) Determine the technology matrix and test Simon-Hawkin's condition for the viability of the
system.
(b) If the domestic demand changes to 80 and 40 units, respectively, what should be the gross output
of each sector to meet the new demands?
(c) If the total labour available is 100 units, is the solution feasible?
(d) Find the equilibrium prices if the wage rate is Rs. 50.
(e) Find the value added in each sector.

Question 5: For a two-sector economy, the input-output coefficient matrix is A = 0.5 0.3

0.2 0.4

Find the gross output if the final demand of two sectors is 10 and 20. Capital and labour are used as two
primary inputs. Their coefficients for the two sectors are given as:

Capital 0.4 0.3

Labour 0.2 0.4

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 Matrices and Determinants - Question Bank 3 -
Input-Output Analysis
NEP Batch – Semester 3
If the wage rate and interest rate are Rs. 40 and Rs. 100 respectively, find the equilibrium prices for the
two sectors.

Question 6: Suppose that the final demand for steel, coal and electricity in an economy consisting only
of these three sectors are Rs. 10 crores, Rs. 5 crores and Rs. 6 crores respectively. It is given that a rupee
worth of steel requires 20 paise, 40 paise and 10 paise worth of steel, coal and electricity respectively as
inputs; a rupee worth of coal requires 30 paise, 10 paise and 30 paise worth of steel, coal and electricity
as inputs, and that a rupee worth of electricity requires 20 paise worth of steel, coal and electricity each
respectively as inputs. How much steel, coal and electricity will be produced to satisfy final and
intermediate demands?

Land and labour are used as two primary inputs; their coefficients for three sectors are given as:

0.3 0.2 0.5 If the wage and rent are Rs. 50 and Rs. 100 respectively, find the equilibrium

0.4 0.1 0.2 prices for the three sectors.

Question 7: A two industry input-output relationships are given below:

Consumption

Industry I II Final Gross

Demand Output

I 16 20 4 40

II 8 40 32 80

Labour Day 80 120

Using matrix notations, determine:

(a) Gross output required to satisfy the new final demand of 18 units and 44 units for industry I and II
respectively.

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 Matrices and Determinants - Question Bank 3 -
Input-Output Analysis
NEP Batch – Semester 3
(b) Total labour days required.
(c) Equilibrium prices if wage rate is Rs. 40 per Labour Day.
(2017)
Question 8: A hypothetical economy produces only two commodities X and Y. The two commodities
serve as intermediate inputs in each other’s production. To produce a unit of X, 0.2 unit of X and 0.6
unit of Y are needed. To produce a unit of Y, 0.4 unit of X and 0.3 unit of Y are needed. 3 and 5 labour
hours are required to produce a unit of X and a unit of Y respectively. The wage rate is Rs. 20 per labour
hour. If the final demand of X increases by 150 units and that of Y decreases by 120 units, find:
(a) Change in the gross outputs of each of the two commodities.
(b) Change in labour requirement.
(c) Change in the value-added in the two producing sectors.
(2018)
Question 9: A three sector economy has the following input output coefficient matrix:

A= 0 0.5 0
0.2 0 0.5
0.4 0 0

The labour days required per unit of output of the three sectors are 0.4, 0.7 and 1.2 respectively and
their consumer output targets are 1,000, 5,000 and 4,000 units respectively. By using matrix algebra,
find:

(a) The gross output of each sector

(b) Total labour days required
(2018)

Question 10: In a hypothetical economy, two commodities are produced, X and Y. are produced. The
two commodities serve as intermediate inputs in each other’s production. To produce a unit of X, 0.4
unit of X and 0.2 unit of Y are needed. Similarly, to produce a unit of Y, 0.25 unit of X and 0.5 unit of Y

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 Matrices and Determinants - Question Bank 3 -
Input-Output Analysis
NEP Batch – Semester 3
are needed. 0.1 and 0.15 units of labour are required to produce a unit of X and a unit of Y respectively
and 0.2 units of land are required to produce each unit respectively. The wage rate and rent rate is Rs. 50
per man-day and Rs. 100 per unit respectively. The economy needs 18 tons of X and 44 tons of Y for
final demand. You are required to write the balancing equations and test Hawkins-Simon conditions of
viability of system. Using matrix algebra, calculate the gross output of each of the two commodities and
construct the input-output transaction table. Also, determine the equilibrium prices, total primary inputs
required and the total value added.

Question 11: For a three-sector economy, the input-output coefficients, aij are as given below:

a11 = 0.5, a21 = 0.2, a31 = 0.1, a21 = 0.1, a22 = 0.6, a32 = 0.2, a13 =0.1, a23= 0.2, a33 = 0.6

(a) Using Hawkins- Simon conditions, test whether the system is viable.
(b) Determine the gross output for these sectors when the final demand values for them are 21,000,
42,000 and 63,000 units respectively.
(c) Determine the new level of output if the final demand increases by 1500, 3000 and 4500 units.

Question 12: Given the input-output matrix and final demand vector:

A= 0.05 0.25 0.34 D= 1800

0.33 0.10 0.72 200
0.19 0.38 0.00 900

(a) Explain the economic meaning of the elements 0.33, 0.00 and 200.
(b) Explain the economic meaning(if any) of the third-column sum.
(c) Explain the economic meaning(if any) of the third-row sum.

2022-2023 B.Com(H) DU examination

Question 1: An economy consists of sectors – manufacturing and agriculture.. To produce one

unit of manufacturing output, 0.1 unit of manufacturing goods and 0.01 unit of agricultural goods
are required as input. One unit of agricultural production requires 40 units of manufacturing and
nil units of agricultural goods or inputs. A unit of manufacturing goods requires 4 man-hours of

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 Matrices and Determinants - Question Bank 3 -
Input-Output Analysis
NEP Batch – Semester 3
labour and a unit of agricultural requires 100 man-hours of labour. Calculate the total labour
requirement if 50 million units of manufacturing and 2 million units of agricultural goods are
used for final consumption. Supposing the wage rate as Rs. 10 per man-hour, calculate the
equilibrium prices of manufacturing and agricultural goods.

Question 2: You are given the following transaction matrix for a two-sector economy:

Sectors Sales Final demand Gross output

Purchase I II
I 4 3 13 20
II 5 4 3 12
Primary Input 11 5
(i) Write the technology matrix.
(ii) Rewrite the new transaction matrix when the final demand for the output of sector I
and increases to 23 units.

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