Calculation of the marginal costs of the intermediate product when increasing the export of industrial products

Next, we will make a similar assessment calculation regarding industry.

Suppose that the volume of CP in this industry is reduced by 10, i.e. from 110 to 100. Then the system of equations will take the form:

x1 = 0.5 x1 + 0.2 x2 + 100

x2 = 0.4 x1 + 0.6 x2,  then x1 = x2 = 110/3 = 333.3.

So, it is obvious that in order to increase exports (CPs) in the pro-
Industrial and agricultural production should be increased to the same extent by 1 ruble.
(3.34) or 6.68 rubles in total.

The obtained results of calculations are summarized in the following matrices:

  and 

In order to make sure that the matrix of total cost coefficients (E-A)-1 is just that, we will conduct a verification calculation:

Thus, the initial values of industry outputs in industry and agriculture were obtained, as it should have been.

As a summary of the calculations, let us ask the question of which industry’s export of products is more preferable from the point of view of the marginal costs of the intermediate product (services)?

Obviously, the answer to this question is easy to find in the magnitude of the elements of matrix B, i.e.:

  6,68  5,84

Since 6.68>5.84, increasing exports for agriculture is more preferable.

It would seem that similar conclusions can be reached on the basis of the analysis of the elements of the matrix A, namely:

  0,9  0,8

Since 0.9>0.8, the conclusion is the same. In our example, it’s just a coincidence. The correct conclusion can be made only on the basis of an analysis of the magnitudes of the elements of matrix B.

So, we calculated the total cost matrix of the intermediate product for the basic variant. Using its coefficients, we calculate the coefficients of total labor costs, profits, value added, and capital. Then we will calculate similar parameters for the forecast version of the development of the economy and compare the indicators of its efficiency.