Systems of equations

Ch 3.6, 15.1, 16.9

Prof. Rowan Shi

Week 1
Overview

• many problems can be described by systems of equations, but

you must do the work to write them as such

• today, a systematic treatment of this process:

1. representing a problem as “math”, i.e. a system of equations
2. solving the system of equations in a way that works every time

• finally, for the economics: the Leontief economy as an example

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Outline

Setting up a system of equations

Solving with substitution

Leontief economy

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Outline

Setting up a system of equations

Solving with substitution

Leontief economy
An example

A firm produces headphones in two qualities, Basic (B) and

Premium (P). For the coming year, the estimated output of B is
50% higher than that of P. The profit per unit sold is $300 for
P and $200 for B. If the profit target is $180,000 over the next
year, how much of each quality must be produced?
Section 3.6, exercise 4d
setup

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Setting up a system of equations

• the problem gives you all the information you need, but needs to
be translated to math first

• two kinds of information to be translated

• the objects, to be represented with variables
• set yourself up for success: define the things you ultimately care
about as variables
• once you get their values, you have the answer to the problem
• the relationships linking them, to be represented with equations
• helpful: write the relationships with a mixture of math and words
• usually: need the same number of equations as answers

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1. identify (e.g. highlight) which amounts you want to find

2. give names to these by defining them as variables (sometimes

called “unknowns”)

3. identify (e.g. highlight) the relationships between these

4. represent these as equations

headphones Leontief

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Outline

Setting up a system of equations

Solving with substitution

Leontief economy
Solving with substitution
Ch. 3.6, 15.1

• a solution to a system of equations is a list of values like xf = s1 ,

xt = s2 , . . . , satisfying all equations at once

• systems can be broadly categorised as having

• no solution

• multiple solutions

• a single solution

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Solving with substitution
Ch. 3.6, 15.1

• a solution to a system of equations is a list of values like xf = s1 ,

xt = s2 , . . . , satisfying all equations at once

• systems can be broadly categorised as having

• no solution — there is no way to produce headphones to meet the
profit goal
• multiple solutions — there are multiple production strategies that
meet the profit goal
• a single solution — there is only one strategy that works

• substitution: a way to categorise the system and find solutions

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Headphones, continued

B = 1.5P (1)
180000 = 300P + 200B (2)

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Headphones, continued

B = 1.5P (1)
180000 = 300P + 200B (2)

in applying substitution, you will discover if the system has one, none,
or many solutions

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 1. pick an equation, say i, and an unknown, say xj

2. solve for xj in terms of the other unknowns using equation i

3. eliminate xj from all other equations by substituting

4. drop equation i: you now have a system of m − 1 equations and

n − 1 unknowns; repeat until you have run out of variables or
equations

5. working backwards through equations used for substitution,

recover eliminated variables
Leontief

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Outline

Setting up a system of equations

Solving with substitution

Leontief economy
Putting it together: the Leontief economy

• imagine an economy with three goods: fish, timber, and boats

• the economy’s consumers eat df tons of fish and need dt tons of

timber to build houses

• fish, timber, and boats are needed in turn to produce fish, timber,
and boats:
• to produce fish, fishers need boats
• to produce timber, foresters need to eat fish
• to produce boats, builders need timber

• problem: how much of each good should be produced to meet

final demand?

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Putting it together: the Leontief economy

• observe: we can’t just produce the demanded amount of fish. . .

• to catch those fish, fishermen need boats
• to make boats, builders need timber
• to cut timber, foresters need fish!
T
dt
df
B F

• so in total, need to produce more fish than is demanded by

consumers to fuel the economy (“intermediate inputs”)

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Adding some numbers
Ch. 16.9

• suppose that to produce. . .

• one ton of fish, fishermen use 0.2 boats
• one ton of timber, foresters eat 0.5 tons of fish
• one boat, builders need 0.25 tons of timber

• consumers eat 53 tons of fish and need 50 tons of timber

• represent the problem with math: setup

reminder: our goal is to find how much of each we need to produce in

total to meet consumer demand for fish and timber

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Solving the Leontief economy

f = 53 + 0.5t (F)
t = 50 + 0.25b (T)
b = 0.2f (B)

substitution

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Substitution: a schematic

(F) (B) (T*)

b elim (F*) t elim
(T) (F**)
(T*)
(B)

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Substitution: a schematic

(F) (B) (T*)

b elim (F*) t elim
(T) (F**)
(T*)
(B)

b (B) t (T*) f

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Summary

• represent word problems as systems of equations

more practice: Section 3.6 exercise 4; Ch 3 review exercise 7Ch. 6,
review

• solve systems of equations (using substitution)

• understand, mathematically represent, and solve Leontief

economies
more practice: Section 16.9 exercises 2, 5 even more

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More Leontief practice

• take the lecture example, except instead assume it takes 1 boat to

produce 5 tons of fish
solution: fish: 80; timber: 54; boats: 16

• take the lecture example, except now instead assume that

households also want to own 312 boats in total (which are distinct
from fishing boats)
solution: fish: 120; timber: 134; boats: 336

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