Question

The technology matrix of an economic system of two industries is `|(0.50,0.25),(0.40,0.67)|`. Test whether the system is viable as per Hawkins-Simon conditions.

Answer 1

Technology matrix B = `|(0.50,0.25),(0.40,0.67)|`

I - B = `[(1,0),(0,1)] - [(0.50,0.25),(0.40,0.67)]`

`= [(0.50,-0.25),(-0.40,0.33)]`, the main diagonal elements are positive.

|I - B| = `[(0.50,-0.25),(-0.40,0.33)]`

= (0.50) (0.33) – (-0.40) (-0.25)

= 0.165 – 0.1

= 0.065 (positive)

Since the main diagonal elements of I – B are positive and |I – B| is positive, Hawkins-Simon conditions are satisfied.

Therefore, the given system is viable.