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Question
The technology matrix of an economic system of two industries is `|(0.50,0.30),(0.41,0.33)|` Test whether the system is viable as per Hawkins Simon conditions.
Solution
Technology matrix B = `|(0.50,0.30),(0.41,0.33)|`
I - B = `[(1,0),(0,1)] - [(0.50,0.30),(0.41,0.33)]`
`[(0.50,-0.30),(-0.41,0.67)]`, the main diagonal elements are positive.
|I - B| = `[(0.50,-0.30),(-0.41,0.67)]`
= 0.335 – 0.123
= 0.212, 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.
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