Final answer:
A consumption matrix representing the inter-sectoral demand within an economy for manufacturing, agriculture, and services is constructed, and the intermediate demands generated by the agriculture sector planning to produce 100 units are calculated.
Step-by-step explanation:
Constructing a Consumption Matrix
When assessing the structure of an economy divided into three sectors manufacturing, agriculture, and services, we can construct a consumption matrix that represents the use of goods and services produced by each sector for their own production processes. For manufacturing, it requires 10 units from its own sector, 0.30 units from agriculture, and 0.30 units from services per unit of output. Agriculture uses 0.20 unit of its own output, 0.60 units from manufacturing, and 0.10 unit from services. The services sector consumes 0.10 unit from its own output, 0.60 units from manufacturing, but does not require any agricultural products for its output.
The consumption matrix for this economy is as follows:
- Manufacturing Sector: [10, 0.30, 0.30]
- Agriculture Sector: [0.60, 0.20, 0.10]
- Services Sector: [0.60, 0.00, 0.10]
If the agriculture sector plans to produce 100 units, the intermediate demands created for each sector can be calculated by multiplying the respective consumption numbers by the output planned for the agriculture sector. Hence, for manufacturing (0.60 × 100 units), resulting in 60 units, and for services (0.10 × 100 units), 10 units will be the intermediate demand from the agriculture sector.
This examines the interactions within an economy, highlighting how changes in one sector can affect the other sectors and overall economic development. This information is particularly relevant when considering the Gross Domestic Product (GDP) of a country, which measures the total value of all goods and services produced while avoiding double counting of intermediate goods.