paper we will 523 An Application to Economics Leontief Model

paper we will 52.3 An Application to Economics. Leontief Models Wessily f (1906-1999) was a Russisn-born, American economist who, aside from developing highly sophisticated economic theories, also enpoyed trost fishing, ballet and fine wises He woe the called a closed exchange model. Here is the premise Suppose in a far away land of Eigenbazistan, in a small coontry town called Maville, there lived a Farmer, a Tasior, a Carpes Col Miner and Slackes Bob The Farmer prodaced food the Teiler, clothes, the Carpentes, housing, the Coal Miner supplied enesgy, and Slacker Bob made High Qualiay 100 Proof Mconshine,half of which he drank humselt Let us make the follensing clothes, the Carpenter, housing, the Coal Miner supplied energy . Everything produced is consumed in our sowns Here is a table contaising thes inforsation Hugh Quality 100 Proo ty Food 19 28 15 0.20 in this table all add up to 1. Explain why tdis

Solution

There are 5 people and each 5 have different occupation.

The farmer produces food, the carpenter produces housing, the coal miner produces energy the tailor produces clothes and the slacker bob produced high quality 100 proof moonshine.

It is also given that whatever is produced by each person it consumed by olny htese 5 people.

No product or material is consumed by any other person except the 5 people.

The consumption of each product is different by different person. For example the farmer consumes more food than the tailor or carpenter.

The clothes produced by the coal miner and the farmer is same.

each of the column when added makes a complete 1 or 100%

=> the farmer uses 25% food, 15% clothing 25% housing 18% energy and 20 % high quality moonshne.

=> The Tailor uses 15% food, 28% clothing , 18% housing, 17 % energy and 5 % high quality moonshine.

=> Carpenter uses 22% food, 19% clothing ,22% housing, 22% energy and 10% high quality moonshine.

=>Coal Miner uses 20% food, 15% clothing ,20% housing, 28% energy and 15% high quality moonshine.

=> slacker bob uses 18% food, 23% clothing ,15% housing, 15% energy and 50% high quality moonshine

One thing that can be noted is the producer uses maximum percentage of the product produced by him..