Firm Behavior and the Organization of Industry
October 6, 2020
A firm that uses multi-period pricing to increase profits is likely to: a)be using a type of price discrimination, where new consumers have less…
October 6, 2020
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(1) Assume the following Input-Output Table depicts the inter-industrial relations of a city where, admittedly, people drink a lot of beer. Producers…

I need help with Question 2 on how to calculate Round 2 and then Round 3. Can you provide me with a solution please?

(1) Assume the following Input-Output Table depicts the inter-industrial relations of acity where, admittedly, people drink a lot of beer.ProducersInputsSteelBeerLocalHouseholdsExportsTotal(labor)Steel3020100200Beer30202024010Local1010404030Labor1508080400Imports403010200be identical).Show the corresponding Input Coefficient Table (note, imports and export do not have toInputsSteelBeerLocalHouseholds(labor)Steel0.11540.12500.06250.0000Beer0.11540.12500.12500.7059Local0.03850.06250.25000.1176Labor0.57690.50000.50000.1176Imports0.15380.18750.06250.0588sum1111(2) Use the Input-Output Table above and suppose the beer industry enjoys a $100increase in exports. Show the overall income increase in the steel industry, in the beerindustry, for local businesses and the increase in labor income after 2 rounds (timeperiods). Note that this Table also shows intra-industrial trade. For instance, the steelindustry also needs steel as an input.If the initial income impulse is $100, what is the overall income increase at Round 1,what is it at Round 2? Add up the all three numbers and calculate the overall incomeincrease (This question requires some careful calculations). In these two rounds, howmuch has the initial impulse multiplied?

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