Question

The technology matrix of an economic system of two industries is `|(0.6,0.9),(0.20,0.80)|`.
Test whether the system is viable as per Hawkins-Simon conditions.

Answer 1

Technology matrix B = `|(0.6,0.9),(0.20,0.80)|`

I - B = `[(1,0),(0,1)] - [(0.6,0.9),(0.20,0.80)]`

= `[(0.4,-0.9),(-0.20,0.20)]`, the main diagonal elements are positive.

|I - B| = `[(0.4,-0.9),(-0.20,0.20)]`

= 0.4 × 0.20 – (-0.20) × (-0.9)

= 0.08 – 0.18

= -0.1, negative

Since |I – B| is negative one of the Hawkins-Simon condition is not satisfied.

Therefore, the given system is not viable.